EURUSD

The market’s relapse this week below 30-Nov’s 1.1809 initial counter-trend low confirms at least the intermediate-term trend as down and leaves 01-Dec’s 1.1941 high in its wake as the latest smaller-degree corrective high it’s now minimally required to recoup to arrest the slide from 27-Nov’s 1.1961 high, render it a 3-wave and thus corrective affair and re-expose Nov’s rally. In this regard 1.1941 becomes our new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively based and managed.


While seemingly nondescript, this week’s shorter-term weakness could have longer-term implications, including the resumption of what we believe has been and remains a major, multi-month correction lower from 08-Sep’s 1.2092 high shown in the daily log scale chart above and weekly log chart below. The short-term mo failure discussed above stems from the upper-quarter of the past couple months’ range that comes on the heels of:

• late-Sep’s bearish divergence in momentum that exposes
• 08-Sep’s 1.2092 high as the END of a major 5-wave Elliott sequence from 03-Jan’s 1.0341 amidst
• historically frothy bullish sentiment not seen in over three years.

consistent with our longer-term bearish/correction count introduced in 20-Sep’s Technical Webcast. Left unaltered by a recovery above at least 1.1941, the recovery attempt from 07-Nov’s 1.1554 low to 27-Nov’s 1.1961 high is arguably the B- or 2nd-Wave correction within a broader peak/reversal process that warns of further major correction lower that could still span weeks and, we suspect, to the 1.14-to-1.10-range.

Contributing to this count if massive former support from the 1.19-to-1.21-range on a monthly log scale basis below that, since broken in Jan’15, now serves as a major new resistance candidate. Thus far, as a result of the bullet points above, the market has acknowledged this key resistance. And until the market recoups at least 08-Sep’s 1.2092 high and our key long-term risk parameter, the odds of a larger-degree correction of 2017’s major bull remain intact.
These issues considered, a bearish policy remains advised for long-term players with strength above 1.2092 required to negate this call and warrant its cover. Shorter-term traders who stepped aside from a bearish policy following 14-Nov’s bullish divergence in shorter-term momentum are advised to return to a bearish policy and exposure from 1.1810 OB with strength above 1.1941 required to negate this call and warrant its cover. A run at and eventually below 07-Nov’s 1.1554 low is anticipated.

USD INDEX
Yesterday’s recovery above 30-Nov’s 93.51 initial counter-trend high presents an identical, only inverted technical construct to that detailed above in EURUSD with a failure below 01-Dec’s 92.60 low and short-term risk parameter minimally required to threaten this call.


In lieu of such sub-92.60 weakness we anticipate a resumption of what we believe is a major correction of 2017’s entire 103.82 – 91.01 5-wave decline shown in the daily (above) and weekly (below) charts that could still span months and reach levels in the 96-to-99-range or higher. In sum, a bullish policy remains advised for longer-term players with a failure below at least 92.60 and preferably 91.01 required to threaten and then negate this call. Shorter-term traders are advised to return to a cautious bullish policy from 93.50 OB with a failure below 92.60 required to negate this call and warrant its cover. In lieu of such weakness we anticipate a run at and eventually through 07-Nov’s 95.15 high