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The EURUSD broke through 1.4485 and higher prices are certainly possible from here.  The bullish outlook is now intact as long as price is above 1.4071.

The EURUSD broke through 1.4485 and higher prices are certainly possible from here.  The bullish outlook is now intact as long as price is above 1.4071.  However, the EURUSD is vulnerable to a correction back to the 1.4276-1.4402 zone in a small second wave.  The alternate treats the advance from 1.4071 as a C wave that may be complete.

Evidence that favors bears…

1.) The rally from 95.72 is clearly corrective (3 waves).

2.) It is possible that the drop from 110.65 is a series of 1st and 2nd waves.  If this is the case, then the decline will accelerate and the USDJPY will tumble in a 3rd of a 3rd wave soon.  This outlook is intact as long as price is below 106.74. 

The rally from 1.7729 may be wave i of 3 (or C).  Similar to the EURUSD, the GBPUSD is vulnerable to weakness into the 1.7938-1.8068 zone (Fibonacci zone) before strength continues.  As mentioned yesterday, the targets going forward for bulls are at 1.8430 and 1.8878.  These are Fibonacci extensions of the 1.7443-1.8133 rally.

As long as the USDCHF is below 1.1117, our preferred count is that a 3rd of a 3rd wave is down towards 1.0659 (Fibonacci extension). 

There is no change to the USDCAD analysis.  “The USDCAD reversed at a Fibonacci confluence (61.8% ext. of the .9055-1.0378 advance and 61.8% retrace of the decline from 1.1875 to .9055).  We have been expecting an important top to form.  That top could be in place just above 1.08.” 

The AUDUSD may have completed and ending diagonal at .7799.  If this count is correct, then the AUDUSD would probably return to .8750/.88 (we can’t be sure about how long it would take since we do not know what kind of corrective pattern would unfold).

A countertrend move back to the .7200 area or higher is probably underway.  This level intersects with the underside of a former support line that was broken in August.  Price should remain above .6553.

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.

Contact at jsaettele@dailyfx.com

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