Asian / European Preview
7.18.2012 9.55 PM EDT
Good Evening Fellow Traders
There is no change in our outlook and we are still viewing the pullback in USDX, EURUSD ,USDNOK and USDCHF as a wave ((iv)) or wave ((x)) from 17th June low/high. Its too early to tell whether the strcture from 17 June high/low would turn into an impulse or not and if will be a regular impulse or a ending diagonal . USDX appears to have completed a 3 wave move down from 83.84, as the current pullback proves corrective, we believe we could see another 3 wave sell off in USDX (double zig-zag) and can target 82.63 for wave ((iv)) and 82.20 – 82.50 for wave ((x)).the declined can be label in different ways in the shortest cycles and can go from a (b) wave triangle to a wxy . EURUSD is either in wave (iv) or wave ((x)) from 1.2745. We still believe the pair has another low within the cycle that start on 2.27.2012 which should end around 1.200 area from where ,the pair should made a huge recovery .For now ,we believe the area around 1.2360-1.2450 should hold resistances and made a new low for the pair. GBPUSD found support @ 1.5391 (just below c = a @ 1.5415) and rally from 1.5391 – 1.5677 is in 5 waves with RSI divergence on the H1 chart. It seems wave (b) correction is taking a triangle structure and should bust higher to a area around 15850-15900 before turning lower , GBPUSD is a clear structure and will dictate when the USDX is ready to be bought . USDCHF can target 0.9715 or 0.9650 depending upon whether its in wave (iv) or wave ((x)) Current pullback must hold below 0.9872 for this interpretation to remain valid.
EURJPY has completed a 3 wave decline which can be either wave ((iii)) or ((c)). A corrective pullback to fail below 38.2 fib (0.9816) will leave the door open for another swing lower to complete a 5w decline. Price must remain below 98.50 for this interpretation to remain valid. Above 98.50 will leave the decline in 3 waves which can be either a corrective decline or a bearish nest. A pullback is expected in EURAUD Expect a pullback in wave (iv) to at least 4th of lesser degree but wave (iii) can extend to 2.618 ext @ 1.1828 before wave (iv) pullback begins. Cycle is nearing completion and its better to book profits on shorts and wait for a rally to resell. EURGBP is completing larger degree wave ((iii)). Expect a 3 wave pullback to about 23.6 fib (0.7891) – 38.2 fib (0.7930). Price must remain below 0.7984 for this interpretation to remain valid. With all the Euro crosses calling for a 4th wave pullback, we remain confident of a rally toward 1.2340 – 1.2365 in EURUSD and the final leg up in risk. Only below 1.2161 will negate further upside in EURUSD. We believe risk can find a peak in the next 2-3 trading days.USDJPY the pair looks like is taking a 5 waves structure from (b) , and the area around 78.30 should hold support to keep the upside alive .
There is no change in outlook and we are still favoring the view that Risk Markets (AUD, CAD, AUDJPY,NZD, SPX etc) will trade lower after the seven swing end, many of this indexes and pairs have done the seven swing but we believe until the NZDUSD ,AUDJPY and FTSE made the seven swing the risk trade wont give up .In the case of the USDX , the indexes can reach a area around 82.60 and even lower to 82.00 but we recommend follow Cable GBPUSD to finished the three waves swing from 15400 area to around 1.5850-15900 before any chances of USDX rally .
Trade Safe & Good Luck
ElliottWave Forecast Editorial Team