currency crosses

Currency Crosses: Technical Outlook

The Euro crosses are mixed while the Yen crosses work towards resistance levels in order to correct impulsive declines from January highs.

 

Euro / British Pound

The EURGBP has strengthened in what is probably a small 4th wave. 8800 is resistance. Since the rally is a 4th wave, a triangle is possible. Price ideally stays below 8853 (wave .i low).

 

Euro / Swiss Franc

Since last week’s outside day, the EURCHF has traded sideways. Potential channel resistance intersects with 14818 (former pivot high) on February 11th. 14871 (former support) is also potential resistance. I continue to favor the downside below the breakout level of 15000.

 

Euro / Canadian Dollar

I want to convey the importance of last month’s low in the EURCAD. That low occurred just below the October 2008 low / downward sloping trendline support. The rally from the January low is impulsive (5 waves) so the upside is cautiously favored. However, a break would be significant and shift focus to 14405 (February 2008 low).

 

Euro / Australian Dollar

It is possible that an important low is in place for the EURAUD as well. Favor the upside against 15586. Trading above 15965 would bolster bullish prospects.

 

Euro / New Zealand Dollar

The EURNZD is in the same position as the EURAUD. The decline from 21267 may be complete in 5 waves, which means that a more important low may be in place. A move above 20029 would increase confidence in the upside.

 

Euro / Japanese Yen

With 5 waves down complete at 12522, an expanded flat would explain the drop to a new low (12440). A push above 12713 would satisfy minimum expectations for wave c. The former breakout point at 12745 is potential resistance. Additional resistance would be 12841 and 12954.

 

British Pound / Japanese Yen

“Big picture, it remains my contention that the rally to 16310 completed a 4th wave correction and that the GBPJPY will eventually decline to a new low beneath 11879.” Near term, favor the downside against 14736. A break below 14300 / support line would shift focus to 14200 (12/9/09 low).

 

Swiss Franc / Japanese Yen

The CHFJPY pattern is the same as the EURJPY. An expanded flat may be underway. Trading above 8645 would complete the pattern. Former support at 8700 is potential resistance.

 

Canadian Dollar / Japanese Yen

I wrote Monday that “the decline from 9065 may be complete as an impulse (5 waves) with wave 5 truncated. Look to short rallies this week. Resistance is at 8650 and 8726. Eventually, a break below 7990 is expected.” The CADJPY rally is approaching the mentioned levels, so watch for signs of CADJPY weakness.

 

Australian Dollar / Japanese Yen

Bigger picture, the AUDJPY rally from the October 2008 low is in 5 waves and probably wave A of a multi year A-B-C correction. Most important is wave 5 of the rally, which is an ending diagonal. Ending diagonals are often fully and sharply retraced. This places a bearish target at 7074. Near term resistance is from 8185 to 8274.

 

New Zealand Dollar / Japanese Yen

The short term NZDJPY pattern is similar to the short term CADJPY pattern. The decline from 6877 is impulsive if one allows for a truncated 5th wave. Levels to expect resistance are 6499, 6541, and 6633. The larger trend is considered down against 6877. Bigger picture, the rally from 5259 is a diagonal and expectations are for a full retracement of that rally.

 

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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