currency crosses

Currency Crosses: Technical Outlook

Barring near term pullbacks, Euro crosses look likely to continue lower in the weeks ahead. The Yen crosses are a mess.

 

Euro / British Pound

It is probable that price action since the December 2008 high (9807) is a sideways correction. Movements since then are in 3 waves. A triangle could be underway. Expect price to work lower towards 8575 (100% extension) over the next several weeks/months with 9160 remaining intact. If a flat is unfolding, then the EURGBP will drop below 8400 before seeing upside potential.

 

Euro / Swiss Franc

The decline from 1.5150 may be the beginning a larger decline from the 14 month triangle turned sideways consolidation. If this is the true break, then the pair has much, much, much more to fall. The break is valid against 15150 and resistance is 15000 (breakout level) and 15050.

 

Euro / Canadian Dollar

With an impulse (5 waves) down from 16020, the EURCAD is at risk of a pullback towards resistance, which begins at 15230. Fibonacci resistance begins at 15345 but 15390 is probably more important resistance.

 

Euro / Australian Dollar

The EURAUD is similar to the EURCAD in that there are 5 waves down from a recent high (ignore the bad ticks at the top of the chart). As such, expect a small pullback with initial resistance at 16100 (a resistance zone extends to 16180) before the pair continues lower.

 

Euro / New Zealand Dollar

The EURNZD appears to be working lower in wave 5 of its decline that began in early 2009. Once the 5th is complete, a large recovery likely brings price back above 21000. Rather than place targets for the end of wave 5 at this point, I’ll allow the decline to play out. Price ideally remains below 20440.

 

Euro / Japanese Yen

The longer term charts suggest it is better to be bearish than bullish (rounding top, break of 3 trendlines aka the fan principle) despite the bullish USDJPY picture. Near term, a flat correction could be complete from a wave 1 low. The 200 day SMA is at 13300 and is potential resistance. The EURJPY needs to stay below 13460 in order to keep the 1-2 pattern valid. Confidence is low in direction.

 

British Pound / Japanese Yen

The GBPJPY is approaching 14926 and the 200 day SMA, which is just above 15000. A push above these levels exposes 15330. A rally through there could complete an expanded flat from the September low (bottom of wave i). That would present a short opportunity. Currently, clarity is lacking.

 

Swiss Franc / Japanese Yen

The CHFJPY has traded above 8915, which negates the previously held bearish bias. A potential double top remains in place 9160, but a drop below 8390 is needed to confirm.

 

Canadian Dollar / Japanese Yen

The CADJPY slightly exceeded its October high yesterday and has come off slightly. Since May, range trading has been the order of the day, which could continue. Support is 8585 and there is a support line at 8509 tomorrow (Thursday), which increases 22 pips per day.

 

Australian Dollar / Japanese Yen

The decline from the October high is in 3 waves, which leaves room for fresh upside. A larger triangle, flat, or even completion of an ending diagonal are also possibilities. Upside momentum is strong against 8000.

 

New Zealand / Japanese Yen

After breaking down from a head and shoulders top, the NZDJPY has rallied and is just shy of the former right shoulder. Like the AUDJPY, there are multiple patterns that could be unfolding and upside momentum is strong against 6300.

 

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 at the DailyFX Forum.  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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