Monday, July 30, 2012

Elliott Wave analysis of EUR/USD; USD/JPY; GBP/USD; USD/CAD; NZD/USD; EUR/JPY; EUR/NZD; EUR/TRY and DJI

 EUR/USD - We now have a nice five wave rally of the low at 1.2040 to 1.2389. This rally marked the first part of a more complex correction, that I'm expecting to take place. As the rally from 1.2040 was in five waves we should be looking for a zig-zag correction of which wave a now is in place and wave b ongoing. I expect wave b to correct some 50 - 61.8% of wave a, which should take us down to 1.2174 - 1.2215 area, from where we should see the next rally higher towards 1.2522, where wave c will be equal to wave a. As I expect the entire correction from 1.2040 to be complex I would expect a X-wave after we have reached 1.2522, but for now lets see where wave b ends and how wave c will unfold.
 USD/JPY - Does not in any way unfold in any impulsive manner, which does make me cautious. That said I will keep flexible an look for signs, that will point me towards more correction from the 80.59 high or that a possible new rally is under wave. A break above minor resistance at 79.10 will ease the downside pressure.
 GBP/USD - Here too we now have a five wave rally from 1.5456, which could mark the top of wave c of the Y-wave and we should expect downside pressure to mount. A break below 1.5662 will confirm that wave Y is done at 1.5722. That said having lack the power to get to 1.5902 does make me alert for a possible new X-wave calling for one last correction since the 1.5265 low, but time will show how the decline unfolds.
 USD/CAD - Is working its way lower in wave Z of a triple correction, that began at 1.0446. The ideal target for this third zig-zag is likely in the 0.9920 - 0.9935 area, but just a note of caution, as the c-waves have been smaller than the a-waves, there is a risk that we will only get down close to par, before the correction is over.
 NZD/USD - The break above 0.8054 told us, that the decline from 0.8074 only was a correction (three waves) and we should expect a new rally above 0.8074 towards the 0.8120 - 0.8140 area. We have seen a move to 0.8118 just below the possible target-area, this could be it, but a break below support at 0.8037 is need to confirm, that the correction since the 0.7453 low is over. As long as support at 0.8037 isn't broken we should expect one last rally higher into the 0.8120 - 0.8140 area, before downside pressure takes over.
 EUR/JPY - Has spiked perfectly into the target-area and since the 94.09 low we have now seen a perfect five wave rally adding confidence, that the low at 94.09 was an important low. That said we are still in the very early stages of a possible new major rally. For now look for a correction towards the 50 - 61.8% correction-area of wave one, which will be in the 95.34 - 95.75 area, from where a new rally towards at least 100.70 should be expected.
 EUR/NZD - The new decline to 1.5131 has raised all the alert flags. Normally I would expect a new low, but under the Elliott Wave Principle a 100% retrace of wave one is allowed. That side we should be expecting a new lower low near 1.5096 as long as minor resistance at 1.5222 and more importantly 1.5333 protects the upside. Only a break above 1.5333 will call the bottom and a new rally higher towards 1.5443 and higher.
 EUR/TRY - Has been in a very nice decline since the break below 2.4000, but the rally above minor resistance at 2.2310 does call for a bigger and more complex correction in wave 4. As wave 2 was a simple and Sharp correction, we should expect wave 4 to be shallow but complex. I will be looking for a wave 4 towards 2.3062 and expect it to take more than 8 weeks.
Dow Jones Industrial Index - I have changed my short term count slightly (please see the chart), so that the current rally from 12,522 is wave c of Y. There seems to be two possibilities to the count from the 12,522 low. Wave c is close to a top here at 13,118 and we should see a new decline to below 12,822 and more importantly below 12,726. However the second possibility call for a correction towards 12,873 - 12,931 for one last rally towards 13,187 - 14,000 area before wave c is finally done.
I have slight favor for the second scenario, but will look carefully for a five wave decline to be a the first sign that the top might be in place...

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