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EURUSD at a Critical Point in the Wave Structure

EURUSD

30 min

EUR/USD 30-Minute Chart
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4 Hours

EUR/USD 4-Hour Chart
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Daily

EUR/USD Daily Chart
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My Bias: short in wave 3 blue.
Wave Structure: downward impulse wave 1, 2 blue
Long term wave count: lower in wave 3 blue
Important risk events: EUR: French Presidential Election, German Ifo Business Climate. USD: N/A.

Good evening everyone.
Welcome to the weekend.
I hope you had a great week, the weather here in Ireland has been phenomonal of late,
So this weekend is set to be fun,
hopefully I will get out on the mountain bike a shred some trails!

Down to business:

First things first,
The opening round of the French Election is held on Sunday,
So volitility is a given!
The wave count in EURUSD is firmly bearish right now.
But, as we have seen this week in GBPUSD.
political machinations do affect peoples short term perceptions when it comes to risk appetite.
With that in mind, we may have to deal with a curve ball after the results come in.

The key level for EURUSD at this moment in time is the wave (ii) high at 1.0777.
A break of this high will postpone the immediately bearish outlook.
Whereas a break of the low at 1.0570 will cement the bearish outlook.

Todays price action has been encouraging, the decline off the recent high at wave (ii) looks impulsive.
as it is in a clear 5 wave form.
I have labelled the decline as a complete wave 'i' pink and wave 'ii' should should find resistance at 1.0738.

This wave count calls for a serious decline in wave 'iii' of (iii) at any moment.
An election upset could be a trigger to kick off a decline.


GBPUSD

30 min

GBP/USD 30-Minute Chart
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4 Hours

GBP/USD 4-Hour Chart
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Daily

GBP/USD Daily Chart
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My Bias: short below parity.
Wave Structure:  continuing impulsive structure to the downside in wave (5)
Long term wave count: decline in wave (5) blue, below parity
Important risk events: GBP: N/A. USD: N/A.

The sideways action continued in cable today.
I have labelled this as wave 'iv' pink, in a possible triple combination wave structure.
Wave 'iv' could be complete at todays lows of 1.2753.
A break of todays high at 1.2834 would signal that wave 'v' pink had begun.

For next week I will be looking for the completion of the larger corrective rally in wave (4) blue.
The current target for the high is at about 1.2900, where price would meet that larger trend channel.

At that point it is time to again look for signs of the turndown to come, and the beginning of the next leg of this longterm bear market in Cable.


USDJPY

30 min

USD/JPY 30-Minute Chart
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4 Hours

USD/JPY 4-Hour Chart
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Daily

USD/JPY Daily Chart
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My Bias: LONG
Wave Structure: rally in wave [C]
Long term wave count: wave [C] is underway, upside to above 136.00
Important risk events: JPY: N/A. USD: N/A.

After todays corrective action in USDJPY,
I am slightly more optimistic that a bottom has been set at the recent lows of 108.13, labelled wave '4' orange.
I have re-labelled the wave structure off that low in the most bullish way possible.
That is a series of 1,2 waves to the upside.

On the 4hr chart we get some perspective on the current conditions.
The parallel trend channel has been tagged by the price at the recent lows,
The momentum indicators have diverged to the upside,
The RSI registered a bullish upside cross this week.
And a complete wave structure can be counted.

All the signs are there that a significant low is close at hand, if not in already.
For next week,
Watch the high at 109.50, a further break of that level to the upside which is followed by a break of resistance at 110.10 will be add serious weight to the bullish case.


DOW JONES INDUSTRIALS

30 min

Dow Industrials 30-Minute Chart
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4 Hours

Dow Industrials 4-Hour Chart
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Daily

Dow Industrials Daily Chart
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My Bias: market top is in.
Wave Structure: Impulsive 5 wave structure, possibly topping in an all time high.
Long term wave count: Topped in wave (5)
Important risk events: USD: N/A.

As I suspected last night, The DOW came back down off the highs in a corrective fashion today.

This action is labeled wave '2' red, with wave '3' red possibly underway.
Next week looks bright for stocks in a final last gasp rally to complete wave (ii) grey.

A break of resistance at 20647 will confirm the short term bullish case in wave 'c' pink.
The target for wave 'c' to complete is at 20890 and change.
At that point the larger corrective rally will be complete and there will be a very high probability that the market will turn down in a big way from wave (ii).


GOLD

30 min

Gold 30-Minute Chart
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4 Hours

Gold 4-Hour Chart
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Daily

Gold Daily Chart
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My Bias: Long towards 1550
Wave Structure: ZigZag correction to the upside.
Long term wave count: Topping in wave (B) at 1500
Important risk events: USD: N/A.

The rise off the low at wave 'iv' brown looks very corrective so far.
With that in mind I have shown an alternative view for wave 'iv' brown circled in red.
The wave structure is still labelled with the bullish interpretation.
But it is worth keeping in mind the possibility of a protracted correction in wave 'iv'.

Key support lies at 1273, and that should hold in order for the bullish wave labelling to remain valid.
A break of 1292 will signal that wave 'v' brown is well underway.
The price is at a rest stop at the moment,
but the rally should get underway again shortly.

The fact that the price has continued to trade above that trend line offers a hint that the current labeling is correct and that wave '3' pink will take hold early next week.

 

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