In what has become a Thanksgiving tradition, the US Dollar is weakening...which is likely to carry through to December.
The euro / dollar could still drop below 1.2330 in order to complete a 5th wave within a 5 wave decline from 1.6040 as an ending diagonal (not likely at this point). It is just as probable however that the pair pushes through 1.3302 in a larger recovery from 1.2330. Fibonacci resistance would begin at 1.36. Bottom line; the EURUSD remains in a range, so trade accordingly.
I maintain that the larger USDJPY trend is down so strength should be sold. However, it remains unclear whether or not the rally from 90.86 is complete. As long as price remains below 98.31 (and preferably below the resistance line from early October), bearish potential is significant. A rally above 98.31 would suggest that a C wave rally will exceed 100.60.
Altering the structure slightly, the rally from 1.4554 is probably wave 4 of (3) (within a 5 wave decline from 2.1160). Significant resistance does not begin until 1.60.
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 2002. The pair may be in for a sizeable decline over the next several weeks as price has reversed from the top side of a channel. The low side of that channel should provide support in late December.
The rally from just below 1.15 is in 5 waves and could be a truncated 5th wave. If so, then a correction back to at least 1.15 and possibly lower is underway now. I’ll look to identify a short opportunity in the days and weeks ahead.
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). Bulls may attempt to ‘pick’ this bottom given that the AUDUSD has held above the October low.
There is quintuple divergence with RSI on the daily NZDUSD chart, which warns of a reversal. Friday’s inside day reinforces the potential reversal to the upside. Staying above .5282 keeps the short term trend bullish.
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