USD Patterns Point Lower

•   Euro In 5th Towards 1.5000

•   Japanese Yen Larger Correction

•   British Pound Bounces

•   Swiss Franc Long Term Resistance (USDCHF Support)

•   Canadian Dollar Correcting

•   Australian Dollar Towards .91

•   New Zealand Towards .7700

Commentary:  Wewrote Friday that “the EURUSD is headed higher in wave 5 within the 5 wave bull cycle from 1.4015.  The current rally could be wave 3 within wave 5 and a push above 1.4725 confirms that wave 3 of 5 is underway.  An objective is the 161.8% extension of 1.4520-1.4725/1.4582 at 1.4912.  This outlook remains favored as long as price is above 1.4582.”  There is no change to this outlook. 

Strategy:  Bullish, against 1.4582, target 1.4912

 Commentary:  We wrote Friday that “the best strategy would be to buy dips.  It looks like the rally from 109.12-111.76 is in 5 waves.”  The decline to 109.77 would be a small a wave under this interpretation.  Expectations are for this rally to exceed 111.76 and test 112.42 before price turns down and heads to a new low.  The rally likely completes larger wave 4 in the 5 wave bearish cycle from 124.13.

Strategy:Bullish, against 109.77, target 112.40

 Commentary: “The decline from 2.1160-2.0522 is either wave 1 in a 5 wave bearish cycle or wave A in an A-B-C correction.  The rally to 2.0844 is wave 2 or B and the decline from 2.0844 is wave 3 or C.  The decline from 2.0844 would equal the 2.1160-2.0522 decline at 2.0209, which is the intial bearish objective.”  Short term, the rally from 2.0353 to 2.0564 and the dip to 2.0450 completes either an a-b of an a-b-c or a 1-2 of a 1-2-3.  Either way, price is expected near term to exceed 2.0564.  Potential resistance is where the rally from 2.0450 would equal the 2.0353-2.0564 rally at 2.0661.

Strategy:   Flat

Commentary:  The decline from 1.1894 appears to be in a 5th wave, which is unfolding as a diagonal.  Under this interpretation, price is likely to fall a bit more, but in a choppy manner before a bottom and reversal.  Worth noting is that the pair is at long term support (the 1995 low is at 1.1172 and the December 2004 low is at 1.1286. 

Strategy:  Flat

Commentary:  We wrote Friday that “it looks like the USDCAD will extend above .9800.  A pullback is expected soon though.  The form of that pullback will alert us as to whether or not the USDCAD has put in a multi-month bottom or is headed lower.”  After reaching .9886 on Friday, the USDCAD has pulled back a bit, but a deeper correction is expected.  The decline and consolidation is likely waves a and b within an a-b-c decline.  The support zone should be strong at .9372/.9510

Strategy: Get long near .9372/.9510, against .9055, target much higher

Commentary: A complex W-X-Y correction may be unfolding, with wave Y underway now.  The rally from .8753-.9068 and decline from .9068-.8815 suggest that either a large flat is unfolding (W-X-Y) or that a triangle is unfolding.  In the former case, price is expected to exceed .9068 and possibly test .9130.  Under the latter interpretation, price is expected to exceed .8995 but remain below .9068.

Strategy: Flat

Commentary: The Kiwi is a similar position.  The rally from .7435-.7675 was in 3 waves, which suggests that the path is to the downside.  However, a more complex correction is possible and even seems likely given the structure in the EURUSD (suggests dollar weakness).  A complex correction would be expected to end near .7762.   

Strategy:  Flat