I am very bullish on the USDCAD.  A double zigzag decline from 1.3068 is considered complete and the pair has carved out a solid 1-2 base (5 up and 3 down) since the October low.  A wave ii low is in place at 1.0415, which places the pair in wave iii higher targeting a break of 1.0875 followed by Fibonacci extensions of 1.1090 and 1.1500.  Price ideally remains above 1.0610 but a drop under would expose support at 1.0590 and 1.0545.

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My short EURJPY position has hit my initial target of the 200 SMA at 132.08. However, I will be holding on to a small short position, with a stop at breakeven, in case we see EURJPY break below 132.00. Potential targets include the 38.2% fib of 112.07-139.21 at 128.95 and the May and July spike lows of 126.90/99.

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Last week I signaled my intention to go short EUR/JPY, and despite risk of being stopped out, I remain in the position. The pair is currently holding up at the 61.8% Fibonacci retracement of the 131-135.80 move at 132.80, but a break lower opens up a move towards 131--my profit target. I will update my stance if we see a substantive bounce from said resistance.

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I have been watching the commodity bloc and yen crosses very closely the past week. Both sectors of the currency market are heavily influenced by risk trends; and the sentiment is heading towards a meaningful breakout in the very near future. To trade in today's markets, we first have to make a decision on when the markets will break and whether risk appetite or aversion will come out ahead in the end. I have been of the mind that a significant retracement in risk appetite is soon to come. However, considering we are now in the countdown to the weekend liquidity drain and next week will be truncated by an extended US holiday; the burden of a breakout seems too high (though I will watch the markets closesly because major breakouts have been known to develop under such circumstances in the past).

Looking through the list of pairs that have technical and fundamental appeal for such a broad scenario, we have quite a few options. However, CADJPY is one of the more appealing setups. For a fundamental background, the Canadian dollar does not carry with it the high-yield status that its Australian and New Zealand counterparts maintain. This may help reduce high volatility and prevent false breakouts. This leaves us to a very clear technical setup. A rising trend line from March that finds confirmation at July, September and October finds further support from a prominent 61.8 percent Fib and 200-day SMA around 83.00/25. There is risk in this position though, so I will go in at reduced size at 83 with a stop 125 points lower (necessary considering the size of tails when the pair has tested its trend). My first objective will be one and a half times my stop. I'll keep the second objective open to gauge momentum.

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Last week, I entered long USDCAD as prices put in a formidable Bullish Engulfing pattern on a re-test of broken resistance at the top of a falling channel that had guided prices lower since the swing high in March. The pair has indeed moved higher and I will remain long, initially targeting the 11/02 wick high at 1.0875. A stop-loss will be activated on a daily close below 1.0415.

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A break below the 50-Day SMA at 0.7297 triggered my short NZD/USD trade which is currently in the money. We have seen some support at 0.7200 but I maintain my target of 0.7080-11/2 low. 0.7100 may be a better point to set your limit. We have started to see risk appetite wane which is weighing on the high yielder. The Kiwi has benefitted from higher interest rate expectations on the back of tightening from the RBA. However, the yield outlook may start to fade as markets realize that its economy isn’t on the same footing as Australia’s which could also add to bearish sentiment.

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The NZD/JPY tumbled lower for the second-day and slipped below the 100-day SMA (64.38) to a low of 64.04 on Friday, and the sharp sell-off took out the short position from 66.46, with a gain of 290+pips. However, as the weekly decline stalls ahead of the November low at 63.21, we may see a corrective retracement over the following week, and I will wait for a directional bias before taking on another trade.

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Remains very well bid on any form of a dip with the underlying structure still grossly constructive. The market has most recently broken to fresh 2009 highs by 0.9405 ahead of the latest minor setbacks. However, given the overbought weekly studies, we are not entirely convinced of the current recovery rally and would not rule out the possibility for a major double top formation with the market seen stalling now above 0.9400 and rolling back over through neckline support at 0.8905. The daily RSI has failed to confirm the latest bout of strength and we look for the latest break back below 0.9210 to help reaffirm our outlook. OPEN OJECTIVE WITH STOP REVISED TO BREAK-EVEN @0.9280.

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