bio2

The euro / dollar remains in a bear trend and could fall to a new low (below 1.23) this week.

The euro / dollar trend is down as long as price is below channel resistance and 1.2861 specifically.  Still, until a break of the large range (1.30-1.23) that has held since late October, confidence in directionality is low.  For now, I am sticking with the triangle count (4th wave complete).

The larger USDJPY trend is down so strength should be sold.  It is unclear though whether or not the rally from 90.86 is complete.  As long as price remains below 98.31, bearish potential is significant.  However, support from the 61.8% of 90.86-100.60 is a warning that 100.60 could be broken (since 61.8% is a level that tends to hold B waves of zigzags).       

Still confined to a steep channel, the British Pound remains bearish.  There is no sign of a bottom, although channel support comes in just below 1.43 this week.    

Short term USDCHF structure is unclear but the long term wave count presented in the monthly forecast is bullish.  Higher highs and higher lows since the March low favors bulls as does the break above a line from late 2005.  Round number resistance at 1.20 has held to this point but a break higher is expected.  The August 2007 high is the next level of chart resistance just above 1.22.   

There is no change to the call for a push above 1.3025 prior to formation of a more important top.  Bulls can move risk to 1.2082 (Friday’s low). 

There remains potential for a large recovery back to the mid .70s given the 5 wave drop from the top (waves a and b of an a-b-c correction would be close to complete).  A rally above .70 would warrant a bullish breakout strategy.  Until then, range conditions may persist.

The implications from a short term head and shoulders pattern are bearish as long as price is below .59 but there remains the possibility of a larger recovery in a C wave to above .6137 (same as AUDUSD structure).  Range traders may also want to nibble at the long side here since Kiwi is at the lower end of its recent range.   

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.

• free demo account
• forex courses
• open an account
• forex stream
• free webinars