Good evening team,

Despite the choppy action on the EURUSD, we are still trading in the direction of US dollar weakness. The DXY appears to be breaking down from a triangle structure which should also lead a breakdown from a bear flag formation on the USDCAD.

DXY Triangle Formation (B wave corrective triangle)

USDCAD 1 Hour Chart

The USDCAD has set up a bear flag formation, also known as a counter trend or corrective rally. Very text book trade setup here and we are looking to target the next support zone at 1.2856.

Trade Setup: SELL STOP, entry price 1.2959, stop loss 1.3025 and take profit target 1.2856.

Stop loss: 66 pips

Take profit: 103 pips

Afternoon team,

Unfortunately, after being roughly 100 pips in profit the AUDJPY has turned sharply lower and activated the SL. We were expecting a similar move in length to the upside which would have taken the AUDJPY into the 96.50 resistance zone before turning bearish. The more significant play is on the short side, now the price action has broken a key support zone, we are looking to trade the AUDJPY down into the 88.40 support level over the next week. The Elliott wave count is still valid, despite the small counter-trend rally.

The JPY has faced a large amount of selling pressure over the past couple of weeks as the BoJ artificially kept rates low to support their economy. However, many analysts are suggesting the BoJ may need to let rates rise in the near future which will result in a rotation back into the JPY. Furthermore, recent comments from the FED Chair Jerome Powell suggests a US recession is a possibility in the near future. He said the Fed was “strongly committed” to bringing down inflation, which had reached its highest level in 40 years while trying not to cause a recession in the process. However, Mr Powell said that achieving a “soft landing” for the US economy would be “very challenging”. The Fed chair said he believed the US economy is currently strong, but acknowledged that a recession could happen. These comments, along with the current market sentiment, support a position going short on the AUDJPY, due to the safe-haven appeal of the Yen and the risk-off risks that put the AUD under pressure.

AUDJPY 4-Hour Chart

Trade Setup: Sell market execution, current price 93.55, stop loss 94.70 and take profit 88.35.

Stop loss: 115 pips

Take profit: 530 pips

Good evening team,

With the DXY coming down from its high and equities appearing as though they are ready for a technical bounce, we are looking to execute a short term bullish trade on the AUDJPY.

The AUDJPY has set up another B wave triangle structure, which indicates there is going to be a final wave c corrective rally.

AUDJPY 4 Hour Chart

The recent rally higher is potentially an a-b-c corrective rally, as we can count an initial 5 wave decline. The AUDJPY is yet to finish off a final wave c corrective rally. Once this has completed we will be looking to potentially switch to a short position.

Trade Setup: Buy market execution, current price 94.40, stop loss 93.70 and take profit 96.24.

Stop loss: 70 pips

Take profit: 184 pips

Afternoon team,

The end of last week ruined a number of great trades, all positions closed at breakeven. We are looking to re-enter on the EURUSD this afternoon as the analysis is still valid as there has not been a lower low in the price action. The DXY is also trading inside a rising bear flag structure, a breakdown from here should open the doors for a move into the 103 support zone. Whilst the long term trend favours the dollar bulls, we are expecting a corrective decline on the DXY over the next few days, which should play into a rally on the EURUSD.

DXY 4 Hour Chart

EURUSD 1 Hour Chart

The Elliott wave count is signalling a 5-3-5 wave structure, which is an ABC corrective rally. The wave B decline has potentially completed at the 1.0360 low. We are expecting a rally to the upside which would complete the wave C rally.

Trade Setup: Buy market execution, current price 1.0534, stop loss 1.0444 and take profit 1.0934.

Stop loss: 90 pips

Take profit: 400 pips

There is a chance to add a second position at the 1.0603 resistance level once the price action rallies to the upside. Once confirmed I will let you know of a second entry position.

Afternoon team,

We have the AUDUSD SL set to breakeven, I am watching the USDJPY which is currently trading at breakeven. There is a possible bearish head and shoulders structure in play which should play in our direction. However, due to the risk-on environment, the JPY is weakening across the board. I will keep you posted if I decide to close the USDJPY early. Therefore as we have a small amount of exposure/risk shorting the USD, I am looking to add a position on the EURUSD. This position has a great risk v reward ratio. We will only activate the position if the EURUSD breaks above the most recent peak in the price action.

USDJPY – UPDATE

EURUSD 4-Hour Chart

The EURUSD has set up a higher low at the 1.0360 support level, there has been a sharp turn higher in the price action. Technically speaking, as the low is a higher low than the 16th of May, this would indicate a bullish trend. We can also count a completed ABC corrective decline, similar to the AUDUSD set-up.

Trade Setup: BUY STOP, entry price 1.0467, stop loss 1.0361 and take profit target 1.0900.

Stop loss: 106 pips

Take profit: 433 pips

Evening team,

We picked up a win on the EURCHF a couple of weeks back and have been waiting to reload the position due to the change in trend.

The Elliott wave count indicates a weaker CHF over the next couple of weeks, and the price action could be entering a wave 3 bullish sequence to the upside. Wave 3 is generally the largest and most aggressive in the cycle, therefore this position should move relatively quickly.

EURCHF – Weekly Chart

We are looking to target the negative trend line resistance initially on this position.

EURCHF 4 Hour Chart

I understand the chart may look messy, however the concept is there has been an initial 5 wave bullish sequence to the upside to form wave 1 or wave A, there has also been an ABC corrective sideways move to form wave 2 or wave B, and a first wave (i) to the upside of wave 3 or wave C.

Trade Setup: But market execution, current price 1.0470, stop loss 1.0343 and take profit target 1.0774

Stop loss: 127 pips

Take profit: 304 pips

Afternoon team, we are looking to execute an initial position from this level and close the pending order placed yesterday. Please update your positions.

Trade setup: Sell market execution, current price 134.65, stop loss 135.60 and take profit target 131.35

Stop loss: 95 pips

Take profit: 330 pips

Evening team,

The AUDJPY has continued to slide to the downside, it will take a corrective bounce higher soon, this is when we will reload for the next large leg lower. For the time being, I am looking to position on the USDJPY for a breakdown trade.

There is a head and shoulders formation in play at a major weekly resistance zone. There has also been a breakdown from a rising trend line support, followed by a bear flag structure.

USDJPY Weekly Chart

USDJPY 1 Hour Chart

Trade Setup: SELL STOP – Entry price 134.02, stop loss 134.92 and take profit target 131.28

Stop loss: 90 pips

Take profit: 274 pips

Evening team,

I have been waiting patiently for the AUDJPY to top, and break down from a rising channel structure. There is possibly a big SHORT setup in play. Due to the triangle formation in the B wave correction, I am under the impression that the rally on the AUDJPY is a final wave C corrective rally. This means a large corrective decline is on the cards.

AUDJPY 4 Hour Chart

AUDJPY 1 Hour Chart

Trade Setup: SELL market execution, current price 95.78, stop loss 96.78 and take profit target 91.15.

Stop loss: 100 pips

Take profit: 463 pips

We are looking to take this down in stages and will build into a short position.

Good morning team,

This morning we are placing a position in the direction of the US Dollar due to the DXY setting up a bullish inverse head and shoulders formation. This indicates a corrective rally should unfold over the next couple of days. The AUDUSD and EURUSD also look favourable for a trade in the direction of the US Dollar.

DXY 4 Hour Chart

USDCAD 4 Hour Chart

There is a bullish divergence on the RSI 4 hour chart, the USDCAD has reclaimed the trend line support and we will look to target the negative trend line resistance initially.

Trade Setup: BUY market execution, current price 1.2595, stop loss 1.2535 and take profit target 1.2685.

Stop loss: 60 pips

Take profit: 90 pips