daily technicals

The dollar rally looks complete or very close to complete against a number of pairs.  Risk is to the downside (for the US dollar).

This is our favored count, which we showed in last night’s Day Ahead and yesterday in the Elliott Wave forum.  A 5th wave terminal thrust may be complete below 1.44 and a bottom in place.  A bullish bias is warranted against the low.  Short term support is at 1.4440.  Extreme bearish sentiment favors a turn.

It’s not pretty, but the USDJPY has made a series of lower highs and lower lows since the August top at 110.65.  Favor the downside as long as price is below 110.28 (price ideally remains below 109.72).

It is not clear as to whether a low is in place for the GBPUSD, but a turn is imminent.  COT positioning is the most extreme in its history by some measures (net speculative shorts and net commercial longs).  Divergence with RSI below 30 on the 60 minute chart for an extended period of time  favors at least a sharp pullback if not an outright reversal.

We wrote yesterday that “on the daily chart, 1.1108-1.1594 is reversal territory.  This area includes the 4th waves of one and two less degrees as well as the 50% and 61.8% retracements of wave 3 from 1.2569 to .9647.”  It is in this large area that a reversal is expected.  Zooming in on the 60 minute chart, a terminal thrust from a triangle is evident.  This may be the top.

In last night’s Day Ahead, we wrote that “The rally to 1.0747 satisfies minimum expectations but there is no sign of a top.  A test of 1.0800/66 would present a chance to fade strength against former long term support at 1.0927.”  The USDCAD got to 1.0775 before an abrupt reversal.  A bearish bias is warranted against there.  

We got the final 4th and 5th waves of larger wave 5 that we were expecting and this morning’s rally is n indicating that a low may be in place.  Potential short term support is at .83.  If this is the low, then the AUDUSD minimum objective over the next few weeks is .88.  

Objectives that we cited recently were .6550 (161.8% Fibonacci extension) and .6739 (where wave 5 would equal wave 1).  Today’s low at .6733 may very well be the end of wave 5 of larger 3 within the long term bear.  A rally back to .7220 is probably underway.  Short term support is at .6816.

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.

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