EUR/USD - We saw a clear break below 131.71 yesterday, but the decline from 132.84 has clearly been in three waves and the first and second declines where almost equal in length, which always raises the danger-flag. A break above minor resistance at 132.54 will confirm that the decline was only in three waves an classify the decline as an "X" wave calling for a new rally into the 132.92 - 133.22 area before the next downside pressure should be expected.Only a direct break below 131.71 and more importantly 131.33 will invalidate any further upside progress and turn us down hard towards the low 130 area.
USD/JPY - I have present my favorite count above, which is calling for the next rise towards 84.50 to be under way. Only a break below support at 81.86 will invalidate this call (overlap between wave i and iv, which is not allowed). A break below 81.86 will be proof that wave 3 ended at 84.17 and wave 4 have begun for a correction back towards the 80.06 - 81.06 area before one last rally higher towards the 85.65 area.
EUR/JPY - Ended the first leg of the correction down yesterday with the test of 108.46. We should now see a "B" wave rise into the 110.30 - 110.50 area before the next decline lower in wave "C" to near 105.91.
USD/CAD - The call yesterday for a challenge of the resistance-line near 99.70 was well founded and the break above this resistance has clearly relived a lot of the downside pressure, but we now need a break above 100.50 to confirm that this isn't just a false break and a new decline is under way. A break above 100.50 will call for a new rally towards the 104.90 - 105.90 resistance area.
VIX Index - almost tested the mid-line resistance yesterday, but only a close above here will call for a test of strong resistance near 20.25.
Dow Jones Industrial Index - Is about to test the minor trend-line support back from the 10.404 low in October 2011. A break below this line will ease some of the upside pressure, but only a break below 12.735 will call for a top. Until then the uptrend stays firm for a possible move into the 13.500 area.
Shanghai Composite - Has clearly broken to the downside and we should see pressure building in the coming days/weeks for a decline below 2,145 in wave 3 of [C].
Hi, since USD/JPY pair is a straight currency and is on beginning of the 5th wave, wouldn't that influence all the JPY cross currencies? If so how can EUR/JPY stay below 110 level if the USD/JPY pair is going to go up 3 yen?
ReplyDeleteThanks!
Hi Unknown,
ReplyDeleteCurrency trading is a relative game and it depends on which currency currently is the strongest, weakest on in between.
It might sound a bit strange, that we could see EUR/JPY weaken at the same time that USD/JPY is working its way higher, but we could easily see EUR weaken more against USD, than JPY against USD and that would produce the outcome, that EUR/JPY is in a correction while USD/JPY at the same time works its way higher towards 85.65 area.
It doesn't wave to be this way and one of the most difficult things within currency trading is trying to outguess the outcome of one currency pair on behalf of two other currency pairs.
Regards EWS