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-euro / dollar resistance at 1.3530
-USDJPY very bearish below 91.69
-GBPUSD approaches Fibonacci support
-AUDUSD tests short term trendline support

As I wrote last week, “since a triangle or flat is probably underway from 1.2327, it is unlikely that 1.3310 holds up.”  The EURUSD is close to dropping below 1.3310, which would expose former support near 1.31 (1.3085).  Short term resistance is at 1.3530.

To review, the USDJPY rally failed just short of “the 61.8% of 1006.60-87.09 at 95.21.  This is also the center of a former congestion zone (roughly 94-97) as well as the 100% extension of the rally from 87.09 to 91.31; at 94.08.”  The rally from 87.09 is in 3 waves, which is corrective.  As such, a drop below 87.09 is expected.  Near term, the decline from 94.67 appears impulsive and a small second wave corrective advance may be complete at 91.69.

I wrote Friday that “weakness is expected down to at least 1.4980 over the course of the next several days.”  The GBPUSD has dropped below 1.4980 and the next level of potential support is the 50% of 1.4347-1.5378 at 1.4862.  The 61.8% is at 1.4741 and potential support as well.  1.5031 is potential resistance.  

The sharp drop from 1.23 is in 5 waves and probably wave A within an A-B-C correction that will end below 1.0367.  The rally from 1.0367 is the B wave of that sequence and likely tests resistance from Fibonacci 1.15, eventually.  Wave b of B is likely complete at 1.0861.  Short term support begins at 1.11.    

We need to wait for the USDCAD to complete this 4th wave correction prior to taking a directional stand.  A drop below 1.1459 would do the trick as that would most likely be the end to a flat.  A triangle is also not out of the question, although in that case a tightening range would last at least a month or more.

I wrote last week that “the structure of the decline on very short term intraday charts (15 min) is promising from a bear’s perspective (decline looks impulsive).  Even if wave (2) is not complete, it is likely that the rally from .6005 would experience a sizeable retracement because it is in 3 waves (a flat with structure 3-3-5 could unfold).  Coming under .6956 would warrant a bearish bias.”  The AUDUSD dropped below .6956 and is testing trendline support now.  Weakness likely extends to .6750 however.  Former support at .6953 is potential resistance.

I would still like to see the NZDUSD complete 5 waves up from .5186 but with patterns in the GBPUSD and AUDUSD suggesting weakness, I am not confident that Kiwi will exceed .6090.  In any case, a push through would target Fibonacci resistance at .6183, which is reinforced by former congestion.

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.

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