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The USDCHF traded beneath its December 2008 low of 1.0367. The print below there meets the minimum requirements for wave v of C. This is in itself does not confirm a reversal but does send off warning signals.
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.”
Short term – A small 4th wave retracement would enable traders to position long for the rest of the move. Support from the 4th wave of one less degree and Elliott channel support is from 1.4440 to 1.4465 today. I wrote yesterday that “4th waves are often choppy, complex affairs. If a 4th wave does unfold, then expect a triangle or flat.” The structure already qualifies as a flat so be on the lookout for support at mentioned points.
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 – which is potential resistance. Near term, the pair is at the top of a steep channel and is testing former resistance so beware the potential for a setback. Support is at 1.6450.
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. .8475 is potential short term support (former resistance).
New Zealand Dollar / US Dollar
The next 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. .6850/85 is potential support.
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, the short term picture is bearish below 93.30. The decline may begin to accelerate as support has been breached (91.73) and price remains confined to a well-contained channel.
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
Big developments in the USDCHF – the pair pierced the December 2008 low of 1.0367. The print below that level meets the minimum requirements for wave v of C.
British Pound / Japanese Yen
There are several indications that the rally from 118.79 is complete such as the break of trendline support in July and the potential double top near 163.00. Also, a head and shoulders top may be forming. Even if one is forming, a rally is expected to form the right shoulder. Potential resistance, from Fibonacci and former resistance, is 157.72. Shorter term, the pair which may be forming a head and shoulders bottom since the end of August (circled – evident on intraday charts). The left shoulder was complex so I am expecting the same for the right shoulder. 150.00/80 is support. A dip to there should stoke demand.
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). 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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