Clarity is lacking ahead of FOMC as it pertains to general USD direction. The ‘break’ lower in the USD last week proved false but one can make the case that action since September high is 5 waves down and 3 waves up. The rally has retraced 61.8% of the decline too so it’s possible that price resumes lower now. Confidence in direction is extremely low right now. Hopefully, this clears up post-FOMC.
Action since the October high in EURJPY is probably a 4th wave. As such, expectations are for a 5th wave rally to a new high. A possible target is 134.29, which is the 61.8% retrace of the 2014-2016 decline and where the rally from the May 2020 low would consist of 2 equal legs. Watch for support near 132.00.
No change to USDCAD but I’m re-posting the chart because BoC is tomorrow. I continues to favor the scenario in which the bounce from 10/21 is a 4th wave. Ideal resistance is 1.2470/90 (38.2% retrace of well-defined pivot since June).
Silver turned up sharply today after dipping below the September 2020 low. Support is reinforced by channel support down here as well. Simply, the combination of well-defined support and extreme pessimism (numerous headlines include ‘plunge’) suggest that it’s time to turn bullish. I’m like the long side now. The first test is about 22.88.
USDJPY has broken out. If the breakout is ‘for real’, then 110.00 should provide support. A measured objective for the triangle is the 161.8% expansion of the widest part of the triangle, which is wave B. That calculation yields 114.21. However, the extreme coil in USDJPY suggests that a more aggressive target is appropriate.
Plain and simple, USDCHF broke out today. Recent resistance is now proposed support at .9242. Near term upside focus is .9367. This is where the rally from the June low would consist of 2 equal legs. Trendline resistance from the April 2019 high and the center line of the channel that originates at the January low intersect near that price.
USDTRY has reached the bottom of the proposed resistance zone allow for one more push to test the 61.8% retrace of the decline from the June high. That level is 8.6044. The 50 day average is just below that level. Don’t forget about the contrarian implications from The Economist cover!
Focus remains higher for EURUSD following today’s hold. In fact, price pulled back to noted support and immediately turned higher. FOMC is tomorrow. The only reason I mention that is because of the potential for increased volatility. Even if you told me what Powell would say tomorrow, it wouldn’t matter. Only the reaction matters! Bottom line, price has held support (for now at least) so I’m looking higher towards the well-defined 1.1950/90 zone.
USDJPY did indeed pull back from 109.00. My near term view is that the drop is a 4th wave within a 5 wave rally from the 4/23 low. Ideal is support is 108.52/55. This is the 38.2% retrace of proposed wave 3 and the 4/20 high.