The crosses present a clear picture of risk aversion. The EURCAD,
EURAUD, and EURNZD look constructive while Yen crosses are at risk of
slipping lower. The AUDJPY and NZDJPY are especially vulnerable.
Euro / British Pound
I wrote Wednesday that “today's reversal just shy of an important
100% extension leaves the pair vulnerable to weakness in a 4th wave
back to .9076 or so since the rally may have completed a third wave
from .8453 (which is 5 waves itself).” Short term structure suggests
that wave a of the 4th wave is nearing completion. Expect a corrective
rally from near current price. Resistance is 92.07 and 92.66.
Euro / Swiss Franc
“There is little to say about the EURCHF technically and there will
not be until the pair breaks from the triangle. The fight between
bulls and bears wages on in a triangle that has been underway since
October. Triangles are typically continuation patterns, so a downside
break seems more probable. Still, forecasting is an exercise in
probabilities rather than certainties so jump the gun at your own
risk. Pushing through either the top of bottom line triangle line
would present a breakout opportunity.” The triangle count shown above
is bearish but a bullish outcome is just as probable. Wave a would be
A and wave B would be a triangle.
Euro / Canadian Dollar
A head and shoulders top has been unfolding since January 2008. A
sizeable bounce (nearly 300 pips) has materialized since the 10/12 low
was made just below the neckline. This brings forth the possibility
that the right shoulder is not yet complete. In fact, the left
shoulder was complex with 2 shoulders. H&S patterns tend towards
symmetry which would imply a nearly 900 pip rally from the current
level. This is something to consider as long as 1.5226 remains
Euro / Australian Dollar
“As mentioned in recent weeks, daily momentum studies are divergent
with price lows. This warns of a low, but until a bullish price
pattern emerges, going long is dangerous.” The EURAUD has continued
lower and there is no chart support until 1.6043. However, today’s
candle is forming as a hammer (less than 2 hours left in trading today
so the candle will probably end up as a hammer), which is a reversal
candle pattern. Trading through 1.6400 would reinforce the reversal
Euro / New Zealand Dollar
“There is evidence that the EURUSD may be building a bullish base.
The low that was made on 10/8 has held and price is respecting a short
term support line.” The EURNZD has now exceeded a 7+ month resistance
line (and odds are that it will close above the line today as well).
Trading above 2.0280 exposes 2.0450.
Euro / Japanese Yen
Keep in mind the larger pattern, which I have discussed at length in
recent weeks – “A B wave triangle is complete at 129 and expectations
are for a C wave rally that carries the EURJPY to the mid 140s (at
least). Long term measured objectives are 144.73 and 154.44. A short
term measured level (from short term head and shoulders break) is
134.00.” The objective was reached and the EURJPY continued straight
through to 1.3600. There is no change to the bigger picture outlook
for an eventual thrust through 140.00 but with 5 waves potentially
complete from 129.00, the risk of a pullback to at least 133.60 (top of
former 4th wave) is high.
British Pound / Japanese Yen
Wednesday’s commentary was that “trading through 144.60 would
confirm that wave i is complete and project a move towards the
149.00-150.00 area (and maybe higher).” The GBPJPY traded has reached
the bottom of the Fibonacci zone, which is reinforced by the 9/2 low.
The rally may be wave a of an a-b-c correction. As such, expect choppy
corrective trade lower early next week.
Swiss Franc / Japanese Yen
The CHFJPY is in the same position as the EURJPY. That is, a
bullish triangle is complete at the 10/2 low. The pair failed at
triangle resistance today and a setback should encounter support at
88.50, then 88.00.
Canadian Dollar / Japanese Yen
A new high (above 90.41) is expected eventually since the decline
from there is viewed as a complex correction (a-b-c-x-a-b-c). The
advance is unfolding as an impulse (as it should) and a pause in wave 4
may be underway now. .8600/50 is support and only a drop below .8423
would negate the call for a new high.
Australian Dollar / Japanese Yen
The AUDJPY is trading at its highest level since October 2008.
Daily RSI is above 70 and the rally stalled at a multi month resistance
line today. On an intraday price chart, the rally from 76.30 looks
complete in 5 waves. The risk of a reversal is high.
New Zealand Dollar / Japanese Yen
A clear wave pattern can be seen in the structure of the NZDJPY
rally since February. The advance is an A-B-C correction with wave C
as a diagonal. Reversals following diagonals are usually sharp.
Today’s key reversal (new high close below previous close) may mark a
Jamie Saettele publishes Daily Technicals every weekday morning, COT
analysis (Monday), 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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