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The dollar remains vulnerable across the board with the exception being the British Pound. A short term head and shoulders top projects a move below 1.6300 and potentially a test of longer term neckline support at 1.6200. Resistance is at 1.6560.
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 1.5160 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.” RSI is above 70 for the first time since early June as price threatens the December 2008 high. Until there is some sign of a top, whether from a price or bar/candle pattern, the trend is considered up. Coming under 1.4450 (and staying below there) would be a warning that top is in place. Watch gold and oil.
British Pound / US Dollar
On the daily, a potential head and shoulders top is evident (although the pattern can not be confirmed until price breaks below the neckline – which is near 1.6200). Bolstering the bearish bias is the shorter term head and shoulders top (which comprises what may be the larger right shoulder), which is confirmed. Bears are favored against 1.6665 although a pullback could test the underside of the neckline near 1.6600.
Australian Dollar / US Dollar
The AUDUSD continues to work higher towards the 78.6% of the decline from .9856-.6007, which is .9032. This level intersects with a potential resistance line on September 24.
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. 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 .6961 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).” At this point, former support in the 91.73/94 zone is potential resistance.
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% extension of the 1.3068-1.0782 decline (from 1.1730).
US Dollar / Swiss Franc
“The print below 1.0367 (December 2008 low) satisfies the minimum requirement 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 on Monday (Euro and Yen crosses), and Intraday Forex Trading Strategy as market action dictates. 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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