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The EURUSD and AUDUSD continue to probe new highs but there are signs that the NZDUSD is vulnerable. The USDJPY may be forming a base from which to work higher. Fibonacci support comes in at 88.95-89.25.
Euro / US Dollar
The EURUSD has traded to a new high for 2009 and focus is now on the top of the channel from early July (5th wave channel, more on that below), which is at 1.5001 tomorrow. Coming under 1.4760 would begin to suggest that a top is in place. Notice where I have placed the label for wave iv of C – at 1.3747. The channeling nature of the EURUSD since that time suggests to me that this labeling is correct. This means that the push above 1.4847 is likely wave of 5 of v of C. Again, the channel top is 1.5001.
British Pound / US Dollar
I wrote yesterday that “the decline may have completed 5 waves down from 1.6746. An objective remains 1.5300 (just above the 161.8% extension) but a corrective rally may delay a decline to that level. In any case, a bearish bias is warranted against the line extended from the September and October 8th highs.” 5 waves are visible from 1.6746 so the odds of a correction back to at least 1.6125 are increased. An extension of weakness in a larger 3rd wave remains possible with price below 1.6125. Strategically, keep a small position on in the event of this occurrence.
Australian Dollar / US Dollar
The AUDUSD has reached the midline of its channel and traded to a new 2009 high today. Continued divergence with momentum suggests that the decline is in its latter stages. Levels to watch going forward are .9200, .9270, and .9325 (these are former support levels from 2008). Coming under .8979 would suggest reversal and shift focus to .8867.
New Zealand Dollar / US Dollar
The NZDUSD has reached what was former support from the June 2008 low at .7444. Clearly, the advance is overdone as evidenced by daily RSI (which is divergent and declined from above overbought). The rally is in its Fibonacci 8th consecutive month. I wrote yesterday that “one can make a case that the decline from .7453 is impulsive (which would indicate a reversal). Watch for resistance in the .7370-.7420 zone.” The NZDUSD reached .7421 today and the down up sequence since the high takes the structure of a 5-3 pattern. Favor the downside.
US Dollar / Japanese Yen
The USDJPY has broken above 90.43, confirming a short term double bottom. Short term support is at 89.30/40 (today’s low is 89.45). Additional support from Fibonacci comes in at 88.95/89.25. Favor the upside against 88.00 and target 92.50 (measured level) as a minimum target.
US Dollar / Canadian Dollar
1.0317, which is the 61.8% extension of 1.3068-1.0782/1.1730, has been reached. 1.0400/50 is short term resistance and only a rally above 1.0527 would begin to suggest that a bottom is forming. Additional objectives are .9914 and .9444.
US Dollar / Swiss Franc
The USDCHF daily wave count warns (and has been warning) of a significant low. A rally above 1.0457/channel resistance would confirm a low. Until then, the USDCHF remains vulnerable. Dropping to a new low (under 1.0180) exposes a measured level at 1.0037.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday mornings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
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