Global Risk Weakness, But not Euro


EURUSD daily chart
Wave 4 Appears to Be Still in Progress

Prices turned up sharply this week, even as the USD remained stronger than other pairs. Prices closed above the up trendline, when they had all the chance in the world to move lower. That suggests wave 4 is still in progress, or that the alternate count is correct, which suggests prices are in wave (C) of ((B)) in the form of a triangle. We’re still not bullish here, but with other currencies weakening there’s easier ways to play dollar strength. I suppose that if one wanted to play a weakening dollar theme this would be the pair to do it, since if we’re still in wave ((B)), it could unfold as a flat, which would allow for even more upside.


GBPUSD daily chart
Pound Collapses

Unlike its European neighbor, the pound looks awful. RSI is pegged to the floor, and so is the pound. There’s no reason to expect anything other than the top count to play out, which suggests that wave iii of (iii) of 3 is still in progress. We may have hit maximum momentum, or may shortly, but any bounce towards resistance should be sold. We remain resolutely bearish.


AUDUSD daily chart
What a difference a week makes.

Notice the three wave decline from the wave (iv) high. That had us looking higher last week, but on the break of last week’s low, and the up trendline, it’s clear that the .7370 area is serious resistance and that the larger trend is still down. It appears that there’s five waves down from the wave ii high, so a small bounce is due early this week. Remain resolutely bearish as long as prices are below the broken up trendline.


NZDUSD daily chart
Kiwi Breaks Down

Same story for NZDUSD as AUDUSD. A break below the up trendline turns the pressure back to the downside. It seems we have five down, so a small bounce for wave ii is due, but we’re bearish against the wave (iv) high, although ideally prices will bounce in three waves and fail to reach the 50% retracement level.


USDCAD daily chart
Closer to a top, but the trend is your friend.

We’re closer to a very significant top, but notice the Sustainable Bull reading on RSI. That means the next move lower is likely to be a correction. We won’t entertain being aggressively bearish until we see a break of the red up trendline or a very clear five down, three up wave structure.


USDJPY daily chart
Bears are in control.

Stepping back a bit, prices are now lower than they were back in November of 2014. Given the break of both the long term and shorter term up trendlines, the downward action is likely still underway. The Sustainable Bear reading on daily RSI suggests any rally should prove corrective. Look for a retest of the 116.00 level over the next few weeks and months, but don’t take your eye off the Japanese printing presses. Japan has proven that there’s no end to the monetary insanity the BOJ and Abe will unleash, and that’s going to be especially true due to collapsing exports to China and other emerging markets.

Happy Trading!

The Wolf

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About The Wolf

Twenty years is a long time to be involved in the trading business. Through many battles in every asset class known to man, knowledge has been gained; and, this project is a way to share that knowledge. The Wolf is a big fan of repeatable market work, or the creation of a “process.”

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