Currency Crosses: Technical Outlook 09-08

Long Term Trends and Pivot Points (monthly data) (updated on first of the month)

Medium Term Trends and Pivot Points (weekly data) (updated every week)

Euro / British Pound

240 Minute Bars

Prepared by Jamie Saettele

Remember, the longer term analysis that I presented last week had us thinking rally. I wrote that “the June low has held for several months and the decline from the top (2008 high) sports 2 equal legs. This rally appears to have legs and support is at 8250/75. In the coming weeks, a move above the red line would signal that a 3rd wave is underway towards 8900/9000.” It seems unlikely that we’ll get that move now though since the rally from 8140 is left as a 3 wave advance (corrective) and the decline from 8395 is an impulse (with the larger trend). Near term expectations are for a move back to 8275 before weakness resumes.

Euro / Canadian Dollar

Daily Bars

Prepared by Jamie Saettele

The EURCAD continues to play out beautifully. “5 waves up in the EURCAD from the June low indicate that the trend is up from that level. Waves a and b of an a-b-c correction are probably complete. Allow for a drop below 13150 in wave c. 12950 is support. Look lower from here.” There is no change.

Euro / Australian Dollar

Daily Bars

Prepared by Jamie Saettele

“The EURAUD appears to have traced out a triangle from the May low. Triangles are typically followed by terminal thrusts in the direction of the larger trend (the ‘terminal’ thrust completes the larger trend). Given the extent of the triangle (at least 3 months), the thrust lower will probably be significant. The classic triangle measuring technique (extend the widest part of the triangle from the breakout price) does not project a low until 12500.” The EURAUD is going to register its first close beneath the May low today. This pair may be about to plunge. 13950 and 13990 are resistance areas in the event of a bounce.

Euro / Japanese Yen

Daily Bars

Prepared by Jamie Saettele

The EURJPY may have found an important low at 10540. The 5 wave pattern is visible from the October 2009 high. Expectations are for a correction higher (which could be sharp) to at least 11500 and perhaps close to 12000 over the next 4 to 6 weeks. Near term, price has broken higher from a small triangle (terminal pattern) so there is the possibility of a move back to 10740 before strength resumes. Below 10540 would clearly negate this outlook and shift focus to 100 (which is also the June 2001 low).

British Pound / Japanese Yen

Weekly Bars

Prepared by Jamie Saettele

The GBPJPY decline from its 2009 high is contained within a well defined channel. The GBPJPY has failed to take out its May low, which creates a divergence with the EURJPY that often attends important turns (this is true with the CADJPY and AUDJPY as well). The drop from 16315 is clearly not an impulse but neither is the rally from 11880. A triangle may be underway here from the January 2009 low. If so, the GBPJPY would turn up soon (it may already have put in a low at 12670).

Canadian Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele

The CADJPY has reversed from the 100% extension of the 9450-8240 decline. A move through 8200 would shift focus to 8500. 8020 and 7970 are supports.

Australian Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele

Since the May low, the AUDJPY has traded sideways in what is probably the first 2 segments of a 3 wave correction (wave a as a flat and wave b as a triangle). The triangle is either complete or close to complete and price should stay above 7450.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson 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.