By: Dale Todd
EUR/USD Rally in Doubt
EUR/USD dropped sharply from the 2nd channel target reached Tuesday morning at 1.3817. The extent of the decline eliminates the MT flat cycle from consideration (blue), but the angled gray up-cycle remains viable. However, a drop below 1st channel support at 1.3612 puts this up-cycle scenario in doubt as well, and would indicate a resumption of the LT downtrend is likely. It appears we have done two channels plus extension in a ST down-cycle so far (orange), which should be enough to complete the correction if we are still moving higher in the MT. Upside resistance should be found at 1.3725 and 1.3790 for today.
USD/JPY Continues in Sideways Channel
Our two scenarios for USD/JPY are still valid, as we remain within the 2nd channel of the MT angled up-cycle (purple), and also within the 1st channel of the MT flat up-cycle (green). Overnight, we traded down very near the angled cycle’s 2nd channel lower boundary at 89.72 and have bounced from there. If we rally through resistance at 90.59 to 90.70, targets are at 90.93 and 91.44 for the angled cycle. 1st channel resistance for the flat green cycle is at 91.06.
Our analysis uses an original methodology incorporating cycles in price and time.