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AUDUSD: Larger Trend Remains Bearish After Stevens Speech

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Feb 22 2013

It seems that markets are recovering slightly after strong push lower on stocks and commodities in this week. The only question when again risk-off trade will resume. The fact is that recent gains on AUD and now also EUR (German IFO index) are driven by news. AUDUSD found the support after RBA Governor Stevens mentioned that China’s growth slowdown has ended. Pair found the support for 80 pips, which could be erased soon if we consider that he is not satisfied with current »strong« AUD value.

With that said we are tracking two slightly different counts for AUDUSD, but both are bearish Elliott wave patterns. The first price action is showing five wave fall from 1.0366 followed by a three wave rally in wave ii) which could be counted as an expanded flat. We like this count but need to see impulsive decline from current 61.8% retracement, while 1.0366 is in place.


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Well, if today market will remain strong and closed somewhere around or above 1.0330 level then we will be focused on the second wave count. This one suggests that market could rally in five waves from 1.0220 and towards 1.0400 before larger downtrend resumes.




So both counts are pointing for weaker AUD in the mid-term, and if you would like to short it don’t give up if pair will extend higher in the next 24-48 trading hours, through 1.0366. We somehow like the second wave count.


GBPUSD : Strong Weakness Could Accelerate After 1.5267 Break

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Feb 21 2013

Cable extended even lower yesterday with very sharp decline during the US trading hours. We know that sharp and big moves usually represent wave three that is part of an impulsive, five wave cycle. As such, we updated the count that is pointing for more GBP weakness in days ahead. We are tracking wave three of three now that may reach 1.5000 level in the very near-term. Meanwhile any pull-backs should prove corrective while price is trading below 1.5440.


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On the weekly chart we can see that price is well below 2009 support line and now also took out the swing low from January 2012, which could be very ugly for GBP. Larger count suggests that pair is at the start of big wave (C ) down.


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EURUSD: Pull-back Within Corrective Decline

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Feb 20 2013

EURUSD is in recovery mode after a sharp fall down to 1.3300 last week. For now, rally from the lows cannot be counted in five waves and pair is also still trading well below 1.3518 invalidation level. Therefore, we think that complex corrective decline from 1.3710 is incomplete and that market will make one more push down, towards 1.3250 in this week to complete wave C of a second zig-zag that we are tracking. Pair is now testing a very important level around 1.3430/60 which appears to be ideal resistance zone for wave B; 61.8% retracement and also wave B equality from a second zig-zag. An overlap with 1.3370 would confirm the bearish view. Any new, aggressive shorts should have stops above 1.3518.


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GBPUSD Now Below 2009 Trend-line; Sharp Fall To Come?!

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Feb 17 2013

A decline from 2008 peak to 2009, 1.3500 low was in five waves, which in Elliott Wave theory indicates a direction of a larger trend. This is called an impulse wave, and once this leg is complete you will see a reversal in price, against the trend, normally into a slow, choppy and overlapping price action which is personality of a correction. Well, this is exactly what has market experienced since 2009 lows. As such, we are very confident that pair made a corrective pattern in wave (B) position called a triangle. In fact, this triangle could already be in place as current price closed below rising trend-line connected from 2009 low.

We however still want to see a break of wave D) 1.5267 low that will confirm the bearish view for wave (C) fall towards 1.3000.




German DAX Suggests More EURUSD Weakness After The Pull-back

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Feb 15 2013

German DAX is in down-trend in this week same as EURUSD from Feb 13 high. Also, both markets reached new lows this morning at the same time, so we can say that correlation between these two is very tight. This tells me that for near-term predictions on EURUSD we should focus on DAX more often and not so much on US stock market which is still in uptrend. OK, now let’s go to see DAX intraday structure. I can count five waves down from 7734, with a triangle in wave iv). That’s very important. Why? Because triangles occur prior to the final move of the larger pattern, so our wave v) should then be last leg in wave (i). The interesting part is that we know that after every five waves correction follows, and this is what we expect on DAX; 3-wave retracement in wave (ii) ideally back to 7650/70.


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So, if correlation between DAX and EURUSD will remain tight then bounce on EURUSD would also not be a surprise. Three wave retracement in wave B back to 1.3400 should be interesting for short position…if we get a pull-back.
Traders, I hope this analysis makes sense. Have a good weekend.
Grega


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EURUSD: Corrective Pull-back Could Now Extend To 1.3250 or even 1.3180

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Feb 14 2013

EURUSD extended its losses today after worse than expected GDP figures from Germany (-0.6%), Italy (-0.9%), France (-0.3%) and also after poor EUR-Flash GDP as well (-0.6%). Pair fell through 1.3350 support which means that corrective decline from 1.3710 will extend even deeper. We are observing a complex structure called a double zig-zag. If we are on the right track with the count then current leg down from 1.3518 is wave A, first wave of another zig-zag headed to 1.3250, which comes in around 1.61.8% extension level of wave X).


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Always when market is in a pull-back mode we need to look on larger time frames and focus on primary trend. On a daily chart below we can see that larger trend is still in bullish mode because pair is trading above two important trend-lines connected from November 2012 lows. With current bearish sentiment on the EURUSD we think that blue support line could be the next target that comes around 1.3250, same level as mentioned above. With that said; pair is headed lower for now, but be aware of a larger trend which could resume once support lines are tested; 1.3250 and 1.3180.



EURUSD: Patiently Waiting For a Bullish Reversal

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Feb 13 2013

EURUSD found some support yesterday and is now testing the upper side of a corrective channel. As such, we need to be aware of an uptrend continuation as A-B-C corrective decline from 1.3710 may have already finished. However, recovery from latest swing low is still not in five waves, therefore we need to wait on more price data and time before bullish run for the EURUSD can be confirmed. Ideally, current recovery from 1.3350 will extend in five waves towards 1.3550 with a daily close above the trend-line that would confirm the bullish reversal we are waiting for.


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