currency crosses

Currency Crosses: Technical Outlook 02-08

The EURGBP may have topped in a small 4th wave. The Yen crosses may be consolidating before continuing lower.

 

 Euro / British Pound

 

The EURGBP has strengthened in what is probably a small 4th wave. Notice that the former 4th wave extreme at 8800 has held, which is common. Since the rally is a 4th wave, a triangle is possible. Price ideally stays below 8853 (wave .i low). Look lower.

 

 Euro / Swiss Franc

 

On Friday, the EURCHF has its biggest daily range (286 pips) since June 24, 2009 (which was 378 pips). The spike reversed in the center of a resistance zone and within a pip of parallel channel resistance. Continue to favor the downside, against Friday’s high. Additional weakness targets the 2008 low at 14300.

 

 Euro / Canadian Dollar

 

The EURCAD has failed to extend weakness below its January low. Still, staying below 14780 keeps the trend pointed lower towards the February 2008 low at 14405 then the December 2007 low at 14139. Trading above 14780 would signal an upside reversal.

 

 Euro / Australian Dollar

 

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

 

 Euro / New Zealand Dollar

 

The EURNZD decline from 21267 may be complete in 5 waves, which means that a more important low may be in place. The move above 20029 increases confidence in the upside. Favor additional gains above 19558. 20454 is the next chart level that could provide resistance. 20750 is an objective from a Fibonacci extension.

 

 Euro / Japanese Yen

 

The EURJPY is nearing potential support from what was former resistance at 12000. 11554 would be the next level (161.8% extension). Understand that in these volatile markets, there is always the risk of a violent short covering rally. In such an event, the EURJPY could exceed 12336 and test former support at 12440. The trend is down against 12701.

 

 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, there is the potential (NOT certainty) for a return to 14150-14200. The trend is down and if you want to catch the big moves, you must be willing to sit through corrections. 12688 is the 100% extension of the prior down move and is potential support. The trend is down against 14535.

 

 Swiss Franc / Japanese Yen

 

The CHFJPY has plunged below the November low and focus in on the March 09 low at 8131. Like the EURJPY, respect the potential for a sharp correction. In this case, resistance is 8425/75. The trend is down against 8645.

 

 Canadian Dollar / Japanese Yen

 

I wrote last week 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 was only able to reach 8615 before rolling over. That level now defines the trend. A rally to and above 8421 cannot be ruled out.

 

 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.” Favor the downside against 8073 even thought the pair could find support here and rally back to 7817/87 before weakness resumes.

 

 New Zealand Dollar / Japanese Yen

 

The larger trend is considered down against 6471 now although a poke above 6216 is not out of the question prior to resumption of weakness. 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.

DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.

Resources

• free demo account
• forex courses
• open an account
• real time news
• free webinars