currency crosses

Currency Crosses: Technical Outlook

EURCAD and EURNZD patterns are especially bullish while the Yen crosses remain mixed.  It is not surprise that the CADJPY and NZDJPY patterns offer the most reversal evidence among the Yen crosses.

Euro / British Pound

It has been several weeks since I proposed that a 4th wave was underway from above .9400. However, a 5th wave rally has failed to take hold and the EURGBP continues to consolidate at the lower end of its range. The probability of a bullish outcome decreases with each day that the EURGBP fails to rally. The alternate count, in which the rally from .8400 is part of a triangle or flat, is gaining traction. Better opportunities exist.

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.” The triangle count shown above is bearish but a bullish outcome is possible too (a would become A and wave B would be ending now). Consider 1.5250 and 1.5070 the breakout levels. The lower triangle line is being pressured now so maybe, just maybe we’ll see a break.

Euro / Canadian Dollar

No change to Wednesday - “Price action from the October low shows a 5 wave rally, followed by a 3 wave decline in the form of an expanded flat. 1.5640 should hold but if it does not, then look for support at 1.5600 and then 1.5510. A rally above 1.6010 shifts focus to 1.6335”.

Euro / Australian Dollar

The EURAUD failed at its resistance line (which is reinforced by former support from the 10/1 low). Until a break above that line, the pair is vulnerable. Coming under 1.6076 would expose 1.5920.

Euro / New Zealand Dollar

The EURNZD blasted through the multi month resistance line last week and a 5 wave rally is evident from the low. A correction could be complete at 2.0325. Under there should find support at 2.0140 and then 2.0000. 2.1550 is an eventual target.

Euro / Japanese Yen

An overriding theme continues to elude me with respect to the Yen crosses. Some show evidence of topping and reversing (NZDJPY especially) and others show more bullish evidence (at least in my opinion). If another trend towards risk aversion is underway, then one would expect downside breaks (keep this in mind). Still, it would be foolish to ignore the triangle pattern in the EURJPY. Triangle patterns are usually of the continuation variety (bullish in this case). Until a break, forecasting big picture direction is futile.

British Pound / Japanese Yen

The GBPJPY decline from 163.15 does reinforce the call for a 5th wave decline to end below 118.79. What is unclear is whether or not the rally from 139.68 is complete. One must entertain the idea that the rally is complete because the reversal occurred near the 61.8% retracement/100 day SMA/former congestion. From a reward/risk standpoint, holding a bearish position against 153.30 is worth a shot since the objective is much lower. Understand that risk is inherent in any trade.

Swiss Franc / Japanese Yen

The CHFJPY pattern since early spring is the same as that of the EURJPY. That is, a bullish triangle could be complete. There is one significant difference however. The CHFJPY slightly exceeded its June high while the EURJPY did not. This sets up a possible non-confirmation and reversal. Bottom line here though is that clarity is lacking.

Canadian Dollar / Japanese Yen

Either a head and shoulders top or triangle is unfolding. The 200 day SMA has held up and maintains a positive slope. Price pattern since 88.33 is impulsive to the downside (5 waves lower and 3 waves up), which portends a downside break from the multi month consolidation.

Australian Dollar / Japanese Yen

After reversing from 85.35, the AUDJPY fell to former resistance turned support below 80. The trend is up until proved otherwise. An early warning would be a trendline break on rate of change (21 day).

New Zealand Dollar / Japanese Yen

The NZDJPY is the only Yen pair that offers compelling reversal evidence. The rally from the February low takes the form of a wedge (and more precisely the form of a an A-B-C advance with wave C as an ending diagonal). The pair broke below its support line last week and that same line has acted as resistance. A potential head and shoulders continuation is visible on the hourly as well.

 

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), 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 and trades at DailyFX Forex Stream.  Send requests to receive his reports via email to jsaettele@dailyfx.com.
 

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