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The EURUSD remains in choppy trade. A drop below 1.4410 would begin to suggest top. The potential GBPUSD head and shoulders top remains something to focus on. 1.4530/50 is potential resistance. Former supports in the USDJPY are now resistance.
Euro / US Dollar
Longer term – “The EURUSD should continue to work higher and push through the December 2008 high in order to complete the entire rally from the October 2008 low. 1.4850 (100% extension of 1.2327-1.4850) is a potential target. The line extended from the March and June highs is also a potential target – that line is at 1.5100 this week and increases about 60 pips a week. Barring a drop below the support line drawn off of the April, August, and September lows, the trend is up to the mentioned levels.” Coming under 1.4410 (and staying below there) would be a warning that top is in place.
British Pound / US Dollar
The GBPUSD may be working higher to form the right shoulder of a head and shoulders top. The left shoulder’s price extreme was 1.6750 – and has been reached today. Potential resistance is also just above 1.69 (parallel extension of potential neckline from top of potential right shoulder. Short term resistance is 1.6530/50.
Australian Dollar / US Dollar
The next AUDUSD objective is .9032 (78.6% of .9856-.6005). Similar to the EURUSD, a support line (channel support in this case) defines the trend (that line is near .84 now). Coming beneath there would suggest that a top is in.
New Zealand Dollar / US Dollar
A NZDUSD objective is .7250. This is where the rally from .6193 would be equal to 61.8% of the .4890-.6601 rally. Again, channel support defines the trend and a short term support zone is .6900/30. MACD is an interesting development. The indicator itself appears to be forming a head and shoulders (divergence) – which warns of a reversal in the weeks ahead. Above .6902 keeps the NZDUSD uptrend strong.
US Dollar / Japanese Yen
Keep the long term outlook in perspective – “a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80). The rally earlier this year met former support and rolled over – which increases confidence in the bearish bias.” At this point, former supports at 91.73 and 93.41 are potential resistance going forward.
US Dollar / Canadian Dollar
Barring a break above the resistance line, the USDCAD is vulnerable to a drop towards 1.0330 – which has been both support and resistance over the last several years. This level is also the 61.8% of .9055-1.3068. Given the level of pessimism with regards to the US dollar – it is important to present the bullish count in which the rally from 1.0631 and decline from 1.1130 composes the first 2 waves of a bull move (either a 3 wave or 5 wave advance). Keep this in mind.
US Dollar / Swiss Franc
As mentioned last week, “the print below 1.0367 (December 2008 low) meets the minimum requirements for wave v of C.” An objective is 1.0037 (100% extension). Trading above channel resistance would indicate with a high probability that a low is in place.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday) and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream. Contact Jamie at jsaettele@dailyfx.com
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