In $/swiss, been warning over the last few weeks that there were lots of negatives in the market, and that risk was rising sharply for at least a month of correcting lower. The market has chopped lower since the Feb 19th high at 1.0900 and though seen as a bigger picture correction (see longer term below), scope remains for at least another few weeks of ranging lower ahead. Currently, the market is testing support at 1.0500/15 (38% retracement from the Nov 26th low at .9920, previously broken Dec/Jan 21st highs) and may hold temporarily. However, the downside pattern from the March 2nd high at 1.0885 is not “complete” (currently within wave iii, see numbering on daily chart below as well as shorter term chart at www.fxa.com/solin/comments.htm) and along with the daily macd which remains in sell mode (see bottom of chart below), adds weight to the view of further, downward ranging over the next few weeks. For now, want to be short and would use a nearby bounce toward 1.0615/30 (38% retracement of wave iii) to sell. Initially stop on a close above 1.0710/25, but will want to get much more aggressive with stops on weakness as this multi-week period of correcting lower is likely to stay choppy ahead. Further support below 1.0500/15 is seen at the bullish trendline from Nov (currently at 1.0435/50) and 1.0400/15.
Longer term no change as the Nov low at .9920 is seen completing an important bottom (and just above the base 2 year range at .9730), with eventual gains toward 1.1075/00 (50% retracement from the Nov 2008 high at 1.2295) and potentially even the ceiling of the range at 1.2295 in the bigger picture, still favored. Note from an Elliott wave perspective, the series of 3 wave moves in both directions over the last 2 years (A-B-C, see weekly chart/2nd chart below) adds weight to this view of gains all the way back to 1.2295 (potential large “flat” type correction), while the 5 wave rally from the Nov low at .9920 suggests that the bigger picture upside is not “complete”. However, there is scope for another few weeks of ranging lower (see shorter term above), but would be seen as a correction, with a resumption of the longer term gains after (see “ideal” scenario in red on weekly chart/2nd chart below). Switched the longer term bias to the bullish side on Dec 9th at 1.0290, and would maintain that bias for now.
Longer term no change as the Nov low at .9920 is seen completing an important bottom (and just above the base 2 year range at .9730), with eventual gains toward 1.1075/00 (50% retracement from the Nov 2008 high at 1.2295) and potentially even the ceiling of the range at 1.2295 in the bigger picture, still favored. Note from an Elliott wave perspective, the series of 3 wave moves in both directions over the last 2 years (A-B-C, see weekly chart/2nd chart below) adds weight to this view of gains all the way back to 1.2295 (potential large “flat” type correction), while the 5 wave rally from the Nov low at .9920 suggests that the bigger picture upside is not “complete”. However, there is scope for another few weeks of ranging lower (see shorter term above), but would be seen as a correction, with a resumption of the longer term gains after (see “ideal” scenario in red on weekly chart/2nd chart below). Switched the longer term bias to the bullish side on Dec 9th at 1.0290, and would maintain that bias for now.
