EUR/JPY broke out of the 12 year triangle in December 2020 and has since rallied nicely to test resistance at 164.17 which marked the 161.8% extension of wave 1. With wave 3 in place I'm looking for a more prolonged correction in wave 4 and ultimately a decline to test support at 151.67 before wave 5 takes over and pushes EUR/JPY to new highs and ideally a rally towards 195.43 where wave [A] and [C] will be equal in length.
Elliott Wave Analysis of Gold - Next upside target seen at 3,100
In my February 23 post I showed the possible S/H/S bottom and said, that a break above the neckline would call for a rally towards 95.03. This rally is now in the cards as the neckline has been broken and the S/H/S-bottom formation now is activated.
Longer term a rally closer to 129.30 is expected, but let's take the coming rally in baby-steps and first look for the S/H/S-bottoms target near 95.03.
In my February 5 post, I called for EUR/USD to move lower to test support at 1.0760. We have seen a low 1.0695 before EUR/USD bottomed and turned higher. Perfectly on the cycle low on February 14.
I will now be looking for EUR/USD to break above minor resistance at 1.0898 to confirm that wave (2) indeed has completed and wave (3) higher towards 1.1830 is in motion. At 1.1830 wave 3 will be 1.618 times the length of wave (1), however, I wouldn't be surprised to see wave (3) extend ever further towards 1.2505 where wave (3) will be 2.618 times the length of wave (1) and maybe even closer to the 3 times extension of wave (1) at 1.2860.
Look for EUR/USD to gain upside momentum in the weeks ahead.
In my January 24 post I call for a continuation lower towards support near 1,0724 and we still could see this support tested, but we might not see EUR/USD reach that support, as we see a support just above at 1,0760 too, which could be enough to complete wave (2) and set the stage for the next impulsive rally in wave (3) higher towards at least 1,1885 and likely higher.
Short-term a break above minor resistance at 1,0898 will confirm that wave (2) has completed and wave (3) higher is in motion.
The chart above show the US 10Y - US 2Y yield (the red line) and the black line is the S&P 500 index.
When the US 10Y - US 2Y yield returns above the zero mark. After having inverted, been below zero percent. We see a larger reaction to the downside in the S&P 500 index. We have seen the US 10Y-2Y yield cross below zero in 1989, 2000, 2006 and in 2022-2024. From the cycles we can see the the inversion bottomed exactly as expected in June 2023 and the inversion between the US 10Y and US 2Y yield has become less deep, but it still hasn't broken back above the zero mark indicating a return to the 2.64% mark, which has been the minimum seen after each normalization from an inversion.
Once the zero mark is regained we should also expect a larger correction in the S&P 500 to be seen.
We are not quite there yet, but it will not take much to force a break back above the zero mark indicating a larger correction in the S&P 500 taking place and a return to the 2.64% mark for the US 10Y - US 2Y yield.
In my January 2 post I called for a temporary consolidation before renewed downside pressure. This outlook remains firmly in place.
The expected consolidation has likely completed and renewed downside pressure should be expected in the weeks ahead towards the ideal target at 1.0724 from where I expect the next impulsive rally to take hold.
The USD is normally firm in January, which once again has proven to be the case in January 2024, but this should just be a temporary thing and ultimately EUR/USD is expected to rally towards at least 1.2800 in circle wave 3.
USD/JPY saw the completion of an A-B-C rally up from the 2011 low at 75.56 with wave A completing at 125.85 in June 2015.
Wave B was a triangle that completed at 103.52 in January 2015 and finally wave C rally higher to test the equality target between wave A and C at 151.43 in October 2022.
Since the 151.43 test we have seen wave A and B of a flat correction wave C is now unfolding. We need a break below support at 140.98 to confirm that wave C is unfolding, but it should only be a matter of time before this support breaks and USD/JPY continues lower towards support at 126.19 and maybe even slightly lower.
Once wave C is complete This will likely be an X-wave, but only time will tell.
JPY should be once of the best performing currencies in Q1-2024.
The Shanghai Composite have been developing a triangle since the peak at 6,124 in 2007.
The final wave - Wave E - is currently developing and should ideally see a decline to test support near 2,642 before the next strong impulsive rally in wave (C).
The first strong indication that wave E has completed will be upon a break above resistance at 3,242 that would call for a rally firmly above the 2007 peak at 6,124.
As long as resistance at 3,086 is able to cap the upside, the pressure will remain towards the downside and a likely decline towards 2,642.
