Forex Update

EUR/USD: Prices Up Before Down

EUR/USD has been moving higher for the last few days but on very low volume and momentum, which is usually an early signal for a trend change. This is clearly evident on RSI with bearish divergence. From an Elliott Wave Perspective we can also see a three wave A-B-C rise from 1.2750 which is a structure of a corrective price action.

As such, traders must be aware of a bearish reversal especially if we consider a shape of an ending diagonal which is a trend-reversal pattern. An impulsive fall from highs and down to 1.3160 will be a first but strong indication that rally is complete and that EUR is headed lower.

Forex Analysis by Gregor Horvat at ForexPros. com

Crude And S&P Futures Showing Bearish Wave Structure

Oil prices moved lower earlier and found support around 105.30, around 261.8% Fibonacci extension level of wave (ii) as expected. We assume that wave 1/A is done and that wave 2/B rally will unfold in the next 24 hours with coming reversal from 107.20-108.00 region. After completed wave 2/B be aware of a new leg down while 109.30 is not breached.

Crude

S&P futures are slow, but still at the top of ending diagonal so be aware of a possible bearish reversal. Resistance is seen at 1696, but bearish confirmation level is at 1685. S&P Futures 1h

Ending diagonal

USD Index Could Find A Support Around 82.00

USD Index Could Find A Support Around 82.00The USD Index has moved out of wave B range yesterday so prices are now already in wave C, final leg of a three wave decline. As such, traders must be aware of a trend reversal, especially if we consider that move out of a triangle is final within the larger structure.

From a confirmation point of view we need an impulsive rally back through 83.15 to turn bullish on the buck.

Forex Analysis by Gregor Horvat at ForexPros. com

EUR/USD: Triangle Projects 1.3300

EUR/USD has been moving sideways for the last two weeks which now seems to be a triangle placed in wave B that is part of a three wave retracement from latest low.

As such, we assume the rally is corrective and the larger trend is still down as long as 1.3415 holds.  However, based on the current price structure, we expect a push up to 1.3250-1.3300 region this week.

Forex Analysis by Gregor Horvat at ForexPros. com

USD/JPY And U.S. Bonds: An Elliott-Wave Look

USD is under pressure across the board after worse-than-expected U. S. Existing Home Sales numbers (5.08M vs. 5.27M exp). U. S. bonds are up, which means it is the lower U. S. yields that are driving the USD/JPY down.

On that pair we can see prices now slightly below channel support line that may cause a downtrend continuation later in sessions and days ahead if today pair will close somewhere around 99,00 or lower. We will adjust the wave count if 100.15 level will be taken out.

India's forex reserves up by $21 mn

India-forexMumbai, July 20 : India's foreign exchange (forex) reserves increased by $21.1 million to $280.188 billion for the week ended July 12, according to data released by the Reserve Bank of India.

The reserves had declined by $4.47 billion to $280.167 billion for the week ended July 5.

The foreign currency assets (FCA) - the biggest component of the forex reserves - grew by $33.5 million at $252.13 billion, the weekly statistical supplement of the central bank shows.

The FCA had plunged by $1.28 billion at $252.10 billion in the previous week.

Elliott Wave Forecast: USDJPY

USD/JPY spiked higher on the intra-day basis through wave (a) highs and reversed down from 99.65.  We are wondering if maybe wave B/2 is already complete.

Well, daily close price, the most important price of the day, below corrective channel support line will put weakness in play.

If we see another push higher, up to 100 then wave B/2 will become more complex, but still corrective leg and part of incomplete larger three wave decline from above 101.30.  In any case bias is to the downside.

Forex Analysis by Gregor Horvat at ForexPros. com

Which FX Pairs To Buy And Sell

The Japanese yen is the strongest currency following the Bernanke speech Wednesday while commodity currencies are the weakest. The reason for the strong JPY is higher US bonds/lower yields. On the overlay chart we can see that best market to sell is the AUD/JPY while the best pairs to buy in risk-on environment is EUR/USD or GBP/USD and even some EUR and GBP crosses.

Market Correlations

Based on market correlations below -- and the S&P futures count -- we may see more USD selling in the near-term. S&P is showing incomplete bullish impulse with current pause in wave four from where prices may rally up in five toward 1675 today.

Gold Could Rise To 1300

GoldGold was down on Friday after the NFP report, but the weakness did not last long as pull-back from 1267 was just wave (b), still only the second leg of an incomplete three-wave rally from 1180. As you know, we are tracking wave 4, which that may reach th 1280-1300 area before the downtrend returns. So for now, let's focus on higher prices within wave (c).

Gold: H4

On the intra-day chart, Gold is forming an intra-day pull-back from its latest swing high, which we think is a correction within an uptrend from 1207. Support for current three waves down comes in at 1240.

Gold: H1

Elliott Wave Forecast For AUD/USD

Elliott Wave Forecast For AUD/USDThe AUD/USD fell back to the lows on Friday but because of overlapping price action in the latest bearish waves and bullish divergence on the RSI we are still observing an ending diagonal placed in wave 5).

However, we could see another push down to 0.8900 before the pair forms a bottom.  On the other hand, only a rise back above 0.9250 will suggest that ending diagonal is complete (ALT count on the chart).

Forex Analysis by Gregor Horvat at ForexPros. com

Elliott Wave GBP/USD: New Sell-Off Can Occur from 1.5320-1.5400

Elliott Wave GBP/USD: New Sell-Off Can Occur from 1.5320-1.5400The GBP/USD found support yesterday around 1.5130, from where we now labeled the end of an extended black wave 3 followed by a corrective rally in wave 4.

Corrections are minimum three wave patterns, so we expect to see more upside price action in the near future. A nice resistance is coming in at 1.5320-1.5400.

Forex Analysis by Gregor Horvat at ForexPros. com

USD/JPY: Corrective Rally Approaching Resistance

USD/JPY: Corrective Rally Approaching ResistanceThe USD/JPY is trading higher, and is now forming a much sharper and extended pull-back from 93.78 than previously thought.

However, the rise is still in three waves with wave C now approaching the important resistance area at 101.50-102.00, where we can see 78.6% retracement of wave A)/1) as well as wave A=C level.

This is a very important zone for a possible turning point. Only an impulse sell-off from here and back to 99.00 will confirm our bearish bias.

Forex Analysis by Gregor Horvat at ForexPros. com

USDCHF: Intra-day Bulls Could Slow Down

USD/CHF is in bullish mode, but because of five waves up from 0.9128 and bearish divergence on the RSI we need to get ready for a three wave, corrective set-back.

Decisive break of the channel support will confirm lower prices for the two or three sessions.

EUR/USD: Pair Could Reach 1.2750

EUR/USD: Pair Could Reach 1.2750EUR/USD made three legs up from 1.2750 low to 1.3420 which we believe represents a corrective, contra-trend price action within a larger downtrend. We are talking about blue wave (2) which is showing signs of completion around 1.3420 level after sharp decline in the last two weeks which is impulsive move. As such, we expect further weakness in coming days and weeks, ideally back to April low as a first projected target zone on the way down.

Traders, please check our next video on EUR/USD and why we think that pair may fall much lower in the next few days and even weeks.

USD Index: Resistance At 83 May Cause Temporary Pull-back

USD Index is at its high of the week, probably at the end of a black wave A/1 because we can count five sub-waves from 80.50.

Notice that on the RSI we also have a bearish divergence which is also very important sing for a potential top in the near-future. However, for now trend is still up so we favour stronger USD; meanwhile any pull-back lower will be corrective wave, part of a larger uptrend. In such case three wave retracement will be a long opportunity.

USD/CAD: Correction Within Uptrend; Can We See 1.0600?!

USD/CAD: Correction Within Uptrend; Can We See 1.0600?!USD/CAD is in pull-back mode from its latest high which we think is just another correction within a larger incomplete uptrend. We are tracking an impulsive structure from 1.0134 that needs to be made by five smaller waves. For now that's not the case so we think that current bearish reversal represents a corrective wave 4 that will look for a support around 1.0400-1.0430 region where previous broken high may become a good support.

GBP/USD: Bearish Against 1.5750

GBP/USD is reversing from 1.5340 which appears to be start of a larger recovery, but only temporary. Notice that first leg down from 1.5750 has unfolded in five waves which means that move is impulsive and showing direction of a current trend that is bearish. As such, we expect that this trend will continue but after a completed three wave rise in black wave 2 that is now unfolding. Ideally this pull-back will find resistance somewhere around 1.5530/1.5600. GBPUSD

Gold Is Impulsive; Could See New Sell-off From Around 1310

Gold Is Impulsive; Could See New Sell-off From Around 1310Gold fell sharply lower last week, even through the 1300 psychological level. Decline is looking impulsive, which means that move should be made by five smaller waves before the bearish trend can find the low. At the moment we can see some reversal to the upside, but we think that's only wave four that will be looking for resistance area around base channel, and at the 38.2% Fibonacci level area; close to 1310.

Elliott Wave Count For USD/JPY: Recovery Could Extend To 100 Level

The USD/JPY has been trading higher since Wednesday's FOMC statement. The pair broke above the upper trend-line of Elliott Wave channel, so we think five waves down in wave A)/1) is complete, and that market is in first leg of a minimum three wave corrective rally.

We are talking about wave B)/2) that might reach the 100 area later this week. Right now we see five waves up from 93.78, so we think that wave A is near completion. Be aware of a wave B pull-back in the near future.

Forex Analysis by Gregor Horvat at ForexPros. com

EUR/USD: Bearish Reversal In Progress, More Weakness In View

EUR/USD: Bearish Reversal In Progress, More Weakness In ViewThere are three waves up from 1.2750 low on the EUR/USD, representing a corrective, contra-trend price action within a larger downtrend.

This is blue wave (2) which is now showing signs of completion around the 1.3420 level after last week's sharp decline - which is an impulsive move. We expect further weakness over the coming days and weeks, ideally back to the April low.

Forex Analysis by Gregor Horvat at ForexPros. com




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