Stay focused on the long term Euro / British Pound reversal set-up. There is also the chance to range trade the Euro / Swiss Franc for at least the next several weeks.
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). The pair rallied to 1.5175 last week, which may serve as the top 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 (which is bullish).
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). After dropping to 1.849 last week and this week, the pair has bounced over 800 pips; so a low may be in place at 1.8490. Former resistance at 1.8277 would be the next level of potential 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 potential support if price falls below 2.1024.
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