Dollar Rallies Big; Euro Tests Major Support

The EURUSD has held above 1.53 (to this point), but the critical level is 1.5283. A drop below there would shift focus to 1.51; which is a Fibonacci extension.

The drop below 1.5364 negates the short term bullish bias. The preferred count that calls for strength for current levels is intact as long as price is above 1.5283. A drop below there indicates that a C wave is underway towards 1.5108 (100% ext. of wave A from 1.6018) or even 1.4653 (161.8% ext.). The pattern should resolve itself in the next day or two.

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.

“The USDJPY rally has gone through 107.20 so we need to look at other counts. One decline treats the drop from 124.13-95.72 as a W-X-Y decline (7 waves, which is corrective). However, it is not clear where this fits in the larger pattern (take a look at the monthly, and it is quite clear that the USDJPY has broken from a 4th wave bearish triangle). The other count is that the decline from 124.13 is a leading diagonal. In Elliott Wave Principle, it is stated that second waves following a leading diagonal often retrace 78.6% of the diagonal. Therefore, both counts suggest strength until 113/118 (roughly the 61.8% to 78.6%). The next short term move could be down in a b wave though (assuming that the advance from 95.72 is wave a). This sets up a near term bearish stance, then probably a flip to bullish in a few months for wave c.” Short term, the pair should encounter resistance from the confluence of the 200 day SMA and 2/14 high at 108.59. A short trade will probably be triggered in the next few days.

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