Staying below 14583 keeps the larger trend pointed lower in either a 3rd wave or C wave. If a C wave, then the decline should extend to the 13650-13750 area. If a 3rd wave, then the decline likely extends closer to 13000. Near term, favor the downside against 14200, as there are 5 waves lower from that level. There is potential resistance at 14113. Position short near there with a stop above 14200 for a break lower.

I’d like to take partial profit on my NZD/USD short position as the pair nears the bottom of its 3-month trading channel and the risk of correction is relatively high. I still think that the pair will continue lower, however, and I advocate leaving part of the position open with tightened risk. I’ll close half of the trade at current market (0.7030) or better, leaving the stop on the remainder above 0.7235. If my risk-sentiment-bearish forecasts holds true, I could easily see this pair continue lower in the coming weeks and month of trading.

After a day of rest, the southern winds of risk aversion have picked back up. Sparked by another move by China to deflate its swelling asset bubble, a downgrade in the outlook for Japan’s sovereign debt and a disappointing recovery from recession for the the United Kingdom; the fundamental means to hold up speculative interests are growing more anemic. In the fray, we have seen the the reversal in carry outlays reversed (benefiting the US dollar and Japanese yen) and those currencies under pressure take another step back.

As of yesterday, I was sitting the fence with positions that were held on the belief that the bearish trend in sentiment would continue and a few new positions that would benifit from a meaningful pullback of the recent risk aversion swing. With this morning’s revival, my range based positions (short USDCAD and long EURJPY) have triggered their stops; but my trend-friendly pairs (short EURUSD and EURGBP) are doing well. I will stick with both. For an initial objective on the dollar-based pair, I’m looking at 1.0425 (the 50% retracement of the last prominent bull wave). As for EURGBP, we are still in the early stages of what looks like a major reversal; so a first target of 0.85 is not out of the question. Another play I am considering this morning is taking advantage of EURJPY’s break from its eight-month range. A bounce to retest former support near 127 is warranted and a stop will need to be at least 100 points higher. Given the breadth of the stop and the exposure to euros I’m building, the position size will have to be reduced significantly.

We initially sold EURUSD at 1.4881. Last week, prices took out support at the bottom of a minor rising channel that had guided a corrective rebound from the 1.42 level as well as soft target at 1.4143. This week has seen consolidation above the revised targetIat 1.4044 (the swing bottom from August), which looks like a temporary period of consolidation that will give way to continued selling. To that ffect,  I remain short. A stop-loss will be triggered on a daily close above 1.4540.

The break below the 200-Day SMA triggered a short EUR/USD position that continues to reap benefits. 1.400 presents potential support and consolidation at the psychological level may be an opportunity to take profits. However, I still see downside risks and am targeting 1.3748 -6/16 low.
Update: I am still short EUR/GBP despite the sharp reversal on the disappointing U.K. GDP data and current bearish momentum is justifying the trade. Additionally, I am watching the USD/Cad as it is at the trend line resistance level that I have been monitoring. A hold would trigger a short trade with a break above leading to another bullish position.

The EUR/GBP bounced back this week to reach a high of 0.8798, but failed to hold above the 10-Day SMA (0.8797) during the previous day, and the pair looks poised to trend lower going into the following month as price action continues to hold below the 200-Day SMA at 0.8841. As the euro-pound fails to retrace the decline from the beginning of the year, I have placed a short entry at 0.8705, the September low, and will target 0.8504, the July low, with the stop 0.8774, the 10-Day SMA as of today.