daily technicals

The EURUSD held its low during the European and US sessions.  A dip below yesterday's low looks likely before a larger recovery.

This morning, I proposed a count that treats the drop from 1.60 as an A-B-C that is nearing completion (view chart).  Taking a closer look, the leg of the decline from 1.4871 is probably wave Y (making the correct count W,X,Y).  These are just details though.  What is important is that the drop consists of 2 equal legs, RSI on multiple time frames is oversold and divergent and the decline from 1.4871 is separated by a triangle.  Moves from triangles are terminal and often retraced; this guideline would suggest a move back to 1.35.

The drop below 97.88 keeps the bearish bias on track.  Resistance begins at 99.35 and I am confident in the bearish bias as long as price is below 102.46 (although price ideally does not come near there). 

The drop from 2.1166 has now retraced 61.8% of the entire rally from 1.3680.  Weekly RSI is oversold and divergent, so be on the lookout for a reversal.

Getting a handle on the USDCHF has been difficult.  At this point, all we can do is look at possibilities.  One of the possibilities will play out, which will present an opportunity.  The corrective nature of the rally from .9634 suggests a leading diagonal.  The rally is confined by converging trendlines as well.  Wave v of the diagonal is right at the line that connects the tops of waves i and iii.  The USDCHF could trade above this line in what is called a ‘throwover ‘before rolling over.

Beginning from .9817, it is possible to count 5 waves up in the USDCAD.  This alone does not mean much but this combined with the position of daily RSI (overbought and divergent) warns that a top could form.

A triangle appears to be unfolding in the AUDUSD.  If so, then a small E wave would bring price back to .70 (approximately) before the pair drops to a new low.

The short term NZDUSD chart looks the same as the AUDUSD short term chart.  A triangle appears to be unfolding.  However, it is not clear where a triangle would fit within the larger pattern (shown above).  My long standing target of below .5927 has already been registered, so a larger recovery could be underway.  For now, it is best to stand aside with this pair.  The momentum extreme occurred at the August 12 low, which under this count would have been wave iii of 3.  Wave iii of 3 often exhibits the strongest momentum.   

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals  every weekday morning (9-10 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.

• free demo account
• forex courses
• open an account
• real time news
• free webinars