daily technicals

Dollar Could Surge Today

Wednesday, 30 April 2008 12:08:45 GMT  |  Jamie Saettele, Technical Currency Strategist

There is no change to our call for near term USD strength, especially against the EUR and AUD (the clearest patterns).  As mentioned yesterday, the initial EURUSD objective is not until 1.5230.  The initial AUDUSD objective is at .9152. 

Reviewing what we already know; there are 5 waves down from 1.6018 which confirm that an important top is in place.  The rally from 1.5554 is in 3 waves which is corrective and additional evidence that the larger trend is now down.  The EURUSD has dropped below 1.5554, therefore wave 3 (or c) within the 5 (or 3) wave bear cycle from 1.6018 is probably underway.  For wave 2 to end above 1.5694, the pair would have to trace out an expanded flat, which is more common in 4th waves and the internal structure of the decline from 1.5694 is impulsive.  Ideally, price remains below 1.5610 but risk can be moved to 1.5694.  View our EURUSD pre-Fed report, published yesterday.

 

STRATEGY:  Bearish, against 1.5694, target below 1.5342 

 

 

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.

“We still maintain that the larger trend is down.  Although a push to measured resistance near 107.25 remains possible, a bearish bias is warranted against 104.82 since the structure of the advance from 95.72 satisfies requirements for a double zigzag (a complex correction that occurs often in 4th waves).”    

 

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

 

STRATEGY: Bearish, against 104.82, target TBD

We are treating the drop from 2.0396 as a leading diagonal (wave 1 of C within the A-B-C decline from 2.1160).  Under this interpretation, the GBPUSD rally from 1.9599 is wave 2 within the 5 wave drop (wave C) from 2.0396.  Keep risk at 1.9964.

 

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.

 

STRATEGY: Bearish, against 1.9964, target below 1.9337

The USDCHF has not moved much since yesterday but the pair is nearing where the rally from .9871 would equal the .9647-1.0249 rally; at 1.0473 (potential resistance).  Keep in mind that a longer term count suggests a rally back to the 1.10/1.12 level.  There is also a count that gives scope to a top closer to 1.05 and new low to follow.  At this point, reward/risk on either side of the market does not warrant a position. 

We remain aggressive USDCAD bulls as advances since the .9055 low are in 5 waves and declines are in 3 waves.  Near term, price should remain above .9998 and we will not even think about an objective until the pair has exceeded 1.0324.  Near term, the advance from .9987 is a series of 1st and 2nd waves.  As such, the rally should accelerate this week.

 

Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency

 

STRATEGY: Bullish, against .9987, target above 1.0324

The decline from .9541 is in 5 waves and is wave 1 (or A) in a 5 (or 3) wave bear cycle.  The rally to .9403 (near the former 4th wave extreme) was in 3 waves and corrective.  Making the case even stronger that a top is in at .9541 and that .9403 will even remain intact is the structure of the decline from .9403.  It too is in 5 waves and is wave i of 3 (or C).  The decline should accelerate today (as long as price is below .9403).  Risk can be moved to .9403

 

STRATEGY: Bearish, against .9403, target TBD

Our preferred count has been that a 1st wave down from .8215 is a leading diagonal and a wave 2 bounce ended at .8033.  The NZDUSD has dropped below .7781, which makes a strong case that a 3rd wave decline is underway.  Keep risk at .7879.

 

STRATEGY: Bearish, against .7879, target TBD

 

Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com

[1] STRATEGY is a summary of our best technical ideas.  The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more.  Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX. 

 

 

 

 

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