daily technicals

Euro Decline Still Has More to Go

Friday, 02 May 2008 10:31:13 GMT  |  Jamie Saettele, Technical Currency Strategist

The EURUSD has fallen nearly 600 pips (to the low) from its 1.6018 top.  So, is it possible that the pair is entering one of the strongest (and maybe the strongest) portions of its decline since the top?  In a word; yes.  As long as price remains below 1.5643, the short term structure is bearish and support does not begin until 1.5230.

There is no change from yesterday.  “The bearish break this morning confirms that wave 3 (or c) within the 5 (or 3) wave bear cycle from 1.6018 is underway.  The initial bearish objective is at 1.5230 and risk can be moved to 1.5643.  Near term resistance is at 1.5540.”     

 

STRATEGY:  Bearish, against 1.5643, target below 1.5342 

 

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

Catching 5th waves can be difficult sometimes so we are focusing on the big picture. The USDJPY count that treats the rally from 95.72 as a 4th wave is valid as long as 107.20 remains intact. There is a 50% Fibo at 105.18, which coincides with the lower region of a congestion zone. Near term, an ending diagonal may be unfolding from 102.67.  In summary, we remain bears and will look for a top in the coming days.

 

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

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.  However, the decline from 2.0025 is choppy and may be a correction.  Until proven wrong (which requires a rally through 1.9909), we are sticking with the bearish bias.  

 

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

 

STRATEGY: Bearish, against 1.9909, target below 1.9337

Given the bearish EURUSD bias, we favor the count that we presented Monday on the daily chart that calls for a USDCHF rally to the 1.10 area.  This bullish forecast remains favored as long as the USDCHF is above 1.0330.  Support should be strong in the 1.0400/40 zone.

 

STRATEGY: Get Bullish near 1.0400/40, against 1.0330, target near 1.10

Patience is paying off.  “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.”  Risk can be moved to 1.0037

 

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

 

STRATEGY: Bullish, against 1.0037, target above 1.0324

The AUDUSD has come under .9290 so it is possible that an A-B-C decline from .9541 is complete.  However, C waves usually extend to the point where equality is reached with wave A; which in this case is at .9219.  Also, it remains possible (as long as price is below .9470) that a much larger decline is in its early stages.  As such, remain bearish against .9470.

 

STRATEGY: Bearish, against .9470, 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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