USD/JPY – This count is still extremely messy due to the flat correction that we have seen since the 8/24 low. When we have a count that unclear the best approach is to zoom out to view the bigger picture to help find some clarity.
When we zoom out on USD/JPY what we find is a clearly corrective move off of the June high that was followed by another clearly corrective move off of the August 24th low. This tells us that from the bigger picture perspective we are most likely in a large B wave. A large B wave also makes a lot of sense as B waves are often very messy and many times the most confusing of all of the waves in Elliott Wave Theory. So given that our view that we are in a large B wave off of the August 24th low the question is where within this B wave are we. Well the action since the August 24th low, and especially since the 9/4 low, is making this extremely difficult to determine however this does not mean that we cannot find a setup in which to trade.
Although the Dollar Index (DXY) is up today, the Dollar is down vs Yen.
The big-picture chart below shows the toppy pattern that developed in the USD vs YEN during the May-Aug timeframe, which has been followed by a spike down, and “bearish” consolidation period that appears to be nearing completion.
If that proves accurate, then USD/YEN should roll over hard into a nosedive that revisits the Aug 24 low at 116.13.
Only an upside reversal and climb above 121.10 will begin to neutralize my current outlook.
Since its July 2011 top at 1.1064, the AUD/USD has lost approximately 35% of its value. Interestingly it wasn’t until June 2013 that we really started to see this move accelerate to the downside. This was due to the fact that from July 2011 until June 2013 we were consolidating in a B wave triangle that ultimately resolved very strongly to the downside in a very large ABC corrective pattern. This is an important fact as it tells that the entire structure off of the high was what we call a corrective structure in Elliott Wave Terms. This helps gives us clues as to answering the question of if this multiyear down trend is coming to an end or if we can expect further downside action to continue.
To answer this question we first need to look at the pattern and first determine if we have enough waves in place to consider the pattern complete off of our 2011 high. The answer is that for a standard corrective pattern we do not have enough waves to consider this move complete off of the 2011 high. Of course there is always the possibility that we have bottomed in a complex corrective pattern; however, when attempting to determine probabilities from a trading perspective this is a lower probability pattern and we only would consider it plausible if we had evidence to suggest that it is in fact playing out. At this point in time we do not, so we are focusing on the higher probability pattern which suggests that a longer term bottom has not been struck, thus allowing us to expect a continuation of the trend down.
So far, GBP/USD has rallied into the 61.8 extension off of our potential wave (i) up for a possible (i)-(ii) i. We are now looking for a wave ii retrace into the 1.5451 – 1.5405 level for a potential entry of a short term long position for wave iii of (iii) up. Initial targets for wave iii com in around the 1.5706 – 1.5751 with targets of wave (iii) at the 1.5823 – 1.5939 zone. Invalidation of this setup comes in with a break under the 1.5294 level.
Originally published on ElliottWaveTrader.net, by Mike Golembesky.
As we wake up this morning from a barrage of overnight Asian and European economic data, it is the Yen pairs which give new hope to those traders bearish on the indices.
Exhibit #1 – The world’s main carry currency, the Dollar/Yen.
Well, the ridiculous “BRIC” meme (Brazil/Russia/India/China) suffered another embarrassment after hours, as Standard & Poors has downgraded the country’s bonds to junk level (and a negative outlook, although I’m not sure what is worse than “junk”). There are probably some people out there who gobbled up EWZ since it looked so “cheap”:
EURUSD: Move down could be a start of the long-expected wave v of (v) of 1 to (preliminary) 1.106 – 1.101 region. As long as 1.1215 signal level holds this remains my primary count.
Completion of the wave 1 is expected to provide us with a strong turn up and bounce in the wave 2. (click chart for a larger version)