The AUDUSD and NZDUSD present the clearest patterns. Both pairs have declined in 5 waves and rallied in 3 from their June 30th highs. The implications are US dollar bullish. Euro / US Dollar A triangle remains possible from above 1.4300, as does a flat (price would come under 1.3750). It is also possible that a significant top is in place above 1.4300.? Near term structure is bearish against 1.4203.? Short term Fibonacci resistance is at 1.4100. British Pound / US Dollar The drop below 1.6231 favors additional weakness below 1.5800. The rally from 1.5800 counts best as a 3 wave rally and 3 wave rallies occur in B or X wave positions, diagonals, and triangles. All of these are possible right now. The B or X wave interpretation seems most probable given the bearish EURUSD implications. Australian Dollar / US Dollar I wrote yesterday that “the decline from .8162 is an impulse (5 waves), which suggests that the larger decline has turned down.” As expected, a 3 wave advance has succeeded the 5 wave decline from .8162. Fibonacci resistance extends to .8050. A top and reversal is expected before .8162.
The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over a specific number of weeks (either 52 or 13).? A reading close to 0 suggests that a bottom is forming and a reading close to 100 suggests that a top is forming.? The readings are for the actual currency, not the currency pair.? For example, a reading of 100 on the Canadian Dollar suggests that the Canadian Dollar is close to a top (USDCAD close to a bottom). ??? Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes.? For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.???? ? US Dollar US Dollar Index: The 13 week index has increased from 0, which indicates a bearish sentiment extreme.? Sentiment extremes occur near bottoms so expect a bottom and reversal in the USD. Implications: bottoming ? Euro EUR : The 13 week index has rolled over from 100, which indicates a turn from a sentiment extreme.? Tops tend to occur in close proximity to readings of 100.
- EURUSD bearish below 1.4030 - GBPUSD may test 1.5800 - AUDUSD and NZDUSD bearish short term patterns Euro / US Dollar The EURUSD pattern may be clearing up (fingers crossed).? I wrote Thursday that “it is still possible that the rally from 1.3750 is unfolding as a diagonal.? Staying above 1.4000 keeps this count valid.? However, there are numerous bearish counts that would result in price dropping below 1.3750 (one shown above).? Coming below 1.4000 would favor the downside.”? While a triangle is possible from above 1.4300, so too is a flat (price would come under 1.3750).? It is also possible that a significant top is in place above 1.4300.? Near term structure is bearish against 1.4030. British Pound / US Dollar The drop below 1.6231 favors additional weakness below 1.5800.? The rally from 1.5800 counts best as a 3 wave rally and 3 wave rallies occur in B or X wave positions, diagonals, and triangles.? All of these are possible right now.? The B or X wave interpretation seems most probable given the EURUSD decline below 1.4000.?? Australian Dollar / US Dollar The decline from .8162 is an impulse (5 waves), which suggests that the larger decline has turned down.? There is potential resistance at the former 4th extreme above .8000.? New Zealand Dollar / US Dollar The short term NZDUSD pattern is the same as the short term EURUSD pattern.? The decline from .6555 is in 5 waves and 5 wave movements occur in the direction of the larger trend.? Initial resistance is at .6350 (former 4th wave extreme). US Dollar / Japanese Yen The triangle continues to play out but there is an alternate bearish count in which the drop from 101.50 is a series of 1st and 2nd waves.? 93.50 defines the trend (above is bullish and below is bearish).? There is little else to say about the USDJPY at this point.? One can not force analysis upon choppy, unclear market structure.? Sometimes (this is that time), the correct decision is to do nothing and await clarity