Commentary – We still favor a EURAUD deeper correction. We favor a deeper correction because wave 5 of the 1.5491-1.7159 rally was extended, and extended 5ths are often fully retraced. This is just in front of the 61.8% of 1.5491-1.7159 at 1.6128. Potential support prior to that level is the 50% at 1.6325 (11/19 low is at 1.6316). (note, W-X--Y indicates that a larger complex correction is unfolding). An alternate count suggests that larger wave 2 is complete at 1.6476. This is setting up to be one of the better trades of the year. Patience is key here though and we will cover any developments to the pattern in the Elliott wave forum. Aggressive traders can trade from the bearish side against 1.6810 for the drop to the 1.6130/50 area.
Strategy – Getting bullish near 1.6150
Commentary – Last week, we wrote that “a setback is due and support should be strong in the 1.4666/1.4824 zone. This is former congestion and is defended by the 50% of 1.1462-1.5198 at 1.4678.” Continue to favor a setback into the 1.4558/1.4680 zone (50%-61.8% of 1.4162-1.5198) before the next bull leg begins.
Strategy – Bullish, against 1.4477, target 1.5890 (aggressive traders can look to add to the position near mentioned support)
Commentary – A triangle is unfolding from the September high at 2.0056. Triangles unfold in 5 waves (a-b-c-d-e) and wave d is close to complete. Therefore, expect additional consolidation in wave e (down) before a terminal thrust higher in larger wave C completes the entire rally from the July low at 1.7029. Potential support is the 1/17 low at 1.8869. This outlook is in line with the other EUR/commodity currency pairs -- that is, expect a drop now that gives way to a big rally.
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