We’ve left the top count in place out of convenience, more than the fact that we think prices are going to reach 1.1400 next week. It’s still possible, but if Friday’s low is taken out in any meaningful way, that means prices will be back below the down trendline off the May/June trendline, and wave (E) may be complete. The initial move into Wednesday’s low is a three wave move, which is the only reason we’ve left the top count intact. If fact, it could be one two, one two down from the 8/18 high which means fireworks to the downside aren’t far off. Notice the lack of any chatter about parity – it’s coming.
It too a retest of the down trendline, but Friday’s key reversal likely means the bears are in control to much lower levels. Notice RSI’s failure at 50, which means the momentum profile remains bearish.
Friday’s reversal was important here too, in that the decline from the supposed wave 2 top is very choppy. If the top count is correct, that means wave (i) and (ii) are complete with a leading diagonal in the wave (i) position. Notice that the RSI profile is very negative, with Sustainable Bear readings into the wave 1 low, and divergence from below Sustainable Bull into the wave 2 top. A break of the red up trendline would mean bears are in full control, and that the entire rally from .6800 will be fully retraced.
While it’s a bit too early to say that NZDUSD is in bearish hands, the weekly key reversal, and Friday’s bearish engulfing pattern suggests exactly that. In addition, the RSI profile is bearish, with divergence into the wave (X) high. Now, we need to see some structural support give way, and since NZDUSD has been a leader to the upside, we see other pairs as better poised to see declines.
Prices are back in the channel, and indeed found support at the horizontal red line. Our prior comments on the range, and general lack of interest in USDCAD continue.
While USDJPY rallied significantly, it’s not over for sure, yet. Prices need to break the red down trendline before we’ll entertain that the wave II low is in place. But, given that we’re looking for USD strength elsewhere, it’s possible that the yen has topped too (USDJPY bottomed). Notice, though, that prices haven’t broken the wave 3 low (Brexit low) yet, so we’d have to assume a truncation. Given the strength of the down trend, we’re not going to fight the downside until more evidence appears.
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.