DAILY ELLIOTT WAVE ANALYSIS 10-31-16 – EURUSD rally begun, Cable not far behind, Yen shows promise.
Long to 1.1500
My Bias: Long towards 1.1500
Sell Zone: 1.1500 – 1.1615
Buy Zone: 1.0700 – 1.0900
Wave Structure: triangle
Short term wave count: Upside from 1.0700. Upper target 1.1500
Long term wave count: Upside from 1.0700. Upper target 1.15000
Important risk events: USD – ISM Manufacturing PMI
Happy halloween to all!
Welcome back to another week of dollar cross analysis, one which may well be a fright for dollar holders!
The EURUSD short term wave count held up well today as the market bounced back off a corrective looking decline.
This is a good sign that we are going to see further upside momentum in a possible wave (iii) green.
The low at wave (ii) green seems set now at 1.0880, and fridays rally past the wave (i) high gave me further confidence that the wave count is correct.
On the 4 hour chart the RSI and MACD crossed up over the centreline in a positive sign for the wave count.
The target for wave ‘a’ blue is in the region of 1.1250, right back up at the previous resistance level.
This level should again form resistance to the price.
The rally over the last few days has taken out three resistance levels of the previous decline, more good news.
But if this is wave (iii) then we should see a solid rally very soon which should do most of the work to carry the market into the end of wave ‘a’ blue.
Fist we need to break Fridays high, one step at a time.
The wave (ii) low at 1.0880 is now the short term invalidation point.
And the wave (i) high should act as support for this rally, so I do not want to see any further dips below 1.0945.
Long to 1.3600
My Bias: Long towards 1.3600
Sell Zone: 1.3300 – 1.3600
Buy Zone: 1.2080 – 1.2300
Wave Structure: Zigzag upside correction
Short term wave count: Upside from 1.1800 – 1.2080, Upper target 1.3600
Long term wave count: Rally in wave (4) blue, Upper target 1.3600
Important risk events: GBP – Manufacturing PMI, USD – ISM Manufacturing PMI,
Cable also cave us a nice impulsive looking rally today after a choppy and corrective looking decline.
The price has not yet pushed up passed the 1.2272 high at wave [i] green.
I have labelled this point as the confirmation point for the bullish wave count.
Should the price cross that level it becomes ever more likely that the current bullish wave count is correct.
The RSI on the 4 hour chart has once again crossed up over the centreline, adding weight to the bullish wave count.
I have marked an RSI cycle on the chart and so far the line has stayed true to this interpretation.
The wave [ii] low lies at 1.2113, so this low is now the invalidation point for the bullish count, Given that I am expecting a third wave now, the price should rally strongly.
The alternative wave count is still marked on the chart, which says that wave B orange is not yet complete.
This will remain a possibility until the price rises above the 1.2272 high at wave [i] green.
So that is the first major target for this rally, If this wave count is correct, then prices should rally up past that level with ease.
Short to 96.00
My Bias: Short towards 96.00
Sell Zone: 104.86 – 107.48
Buy Zone: 91.00 – 95.00
Wave Structure: complex correction to the downside.
Short term wave count: Downside from 104.86, target 96.00
Long term wave count: Bottoming in wave [B] at 96.00, upside to 126.00
Important risk events: USD – ISM Manufacturing PMI, JPY – BOJ Press Conference
We now have a pretty solid elliott wave sell signal off the high at wave [b] grey.
The market dropped in a complete five wave decline in wave ‘i’ purple.
And has now possibly completed a three wave rally in wave ‘ii’ purple.
The upper trend line seems to have acted as resistance and the price failed to hold above the line.
The price should now begin to declne in wave ‘iii’ purple, if this happens I think we can call a top in dollar yen for the medium term.
Any decline below the neckline at 103.156, will be as strong a signal that we could expect that the top is in.
The RSI and MACD are hovering above the centreline right now, and sould cross below soon, this again adds to the idea that the market has in fact topped for now.
So, if the price declines past the first support level at the wave ‘i’ purple, we can take this as the first bearish signal.
USDJPY has been drained of positive momentum for about a week now, it should dropp quickly from here.
The invalidation line for this short term bearish interpretation is at the wave [b] high, 105.50.
Look for the upper trend line to hold the price down overnight.
The BOJ press conference is tomorrow, this will probably bring volatility with it, any declines should be seen as wave ‘iii’ purple getting underway.