daily technicals

Euro Holds 1.27; Break above 1.31 Would Inspires Bullish Confidence

Friday, 13 February 2009 13:55:45 GMT  |  Jamie Saettele, Senior Currency Strategist

-EURUSD confined to range
-USDJPY continues higher
-USDCAD bullish against 1.2123

 

Euro / US Dollar

“The decline from 1.47 is in 5 waves.  This does strongly argue that the larger trend is still down but a corrective rally is expected prior to the next leg lower.  Chart resistance does not begin until 1.33 and Fibonacci resistance does not begin until 1.3430.”  Staying above 1.27 keeps short term bullish potential intact.

US Dollar / Japanese Yen

As suggested recently, it is likely that either a triangle or a flat is unfolding from the December low at 87.09.  I say this because both the advance from 87.09 and decline from 94.67 are in 3 waves.  The subwaves of triangles and flats are 3 wave affairs.  Near term structure is bullish as long as price is above 89.68, which keeps the series of higher lows intact.

British Pound / US Dollar

The rally from 1.35 is in just 3 waves (with the 2 up legs roughly equal…a common trait among corrections) and may be the next down leg in the ongoing bear.  I wrote yesterday that “the risk of a short term bottom and rally is increasing with each tick lower.  There is RSI divergence on the hourly and the indicator has increased from oversold territory.”  A sharp rally to 1.4550 took place this morning.  There is the chance that this morning’s high was the top of either a b wave or small 2nd wave within a bear cycle from 1.4990.  Based on most other dollar patterns however, I have little confidence in the bearish potential.

US Dollar / Swiss Franc

The drop from 1.2303 is an impulse (5 waves), but the drop may be the end of a decline rather than the beginning (a C wave).  The decline would have completed an expanded flat at 1.0367.  This level serves as the secondary low in a longer term bull cycle from .9634.  Still, weakness is expected near term to at least 1.1312.  The 200 day SMA is just above 1.10.  

US Dollar / Canadian Dollar

A triangle has been underway since October and serves as a 4th wave correction.  The break from this triangle should be violent.  Recent price action suggests that the triangle may be complete at 1.2020.  Staying above 1.2123 keeps the triangle bullish breakout scenario intact.  Short term support is in the 1.2380-1.2280 zone has held.  A rally above 1.2552 warrants a bullish bias against 1.2123 in preparation for the breakout. 

Australian Dollar / US Dollar

Staying above .6245 keeps the short term bull count on track in which the AUDUSD is working higher in order to complete a triangle or flat above .7275.  If this outlook is correct, then the AUDUSD should form a low near current price (61.8% of rally from .6245).  The objective is above .6857 at minimum (in case of a larger triangle) and possibly .7275 (in case of a larger flat). 

New Zealand Dollar / US Dollar

The NZDUSD drop from .5454 is viewed as wave b in an a-b-c corrective advance from .4958. A c wave is expected to exceed .5454 and challenge resistance neat the .56 area over the next several weeks.  The short term trend is bullish as long as price is above .4958. 



Jamie Saettele writes Daily Technicals every weekday morning (930-10 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

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