currency crosses

Long term patterns in the Euro crosses are mixed.  The EURGBP presents an attractive opportunity as the pair may be forming an important top.

There is no change to my call for an eventual drop below .5680 in wave (C) of a flat that began in 1995 (valid as long as price is below .9019).  The rally from .5680 is wave (B) and resistance from the 78.6% of .9019-.5680 / parallel channel line continue to hold.  The next potential resistance level would be .8350, where wave C of (B) would equal wave A of (B).    

Expect the EURCHF to range for the next several weeks in a 4th wave correction before the pair drops to a new low (below 1.4296).  1.5056 (Fibonacci) is potential resistance for the upper end of the range.

A long term EURCAD bull is underway.  In the coming months, expectations are for breaks above 1.6331 and 1.6959 (a multi-year target is above 2.0564).  A drop below 1.4711 would not alter the bullish outlook.  If that happens, then look for support near 1.44.  It is worth noting that price action since the 1995 high has the look of an inverse head and shoulders.

It is unlikely that the EURAUD break from the 10 year triangle is complete.  A momentum extreme was registered at the October high of 2.1174 and momentum extremes rarely mark tops in price (a top in price is usually accompanied by momentum with divergence).  Former resistance at 1.8277 may now serve as support.

Another reason to favor strength in the EURAUD over the longer term is the pattern in the EURNZD.  The EURNZD completed a 15 year triangle in July 2007 and a rally to an all-time high is expected.  The 2.03 to 2.0670 zone is support.  

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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