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GBPUSD Bearish Below 1.9848 - Could Test 1.9200

Thursday, 10 January 2008 10:46:05 GMT

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Written by Jamie Saettele, Technical Currency Strategist

• Euro Bearish Below 1.4823
• Japanese Yen From 107.87 is Corrective
• British Pound Drop May Accelerate
• Swiss Franc Objective Near 1.1375
• Canadian Dollar Unclear
• Australian Dollar Continuing to Test Resistance
• New Zealand Dollar Testing Resistance

SEE A DESCRIPTION AT THE BOTTOM OF THIS REPORT FOR THE INDICATORS IN THE TABLE

Join other traders in discussing Elliott Wave Theory on the DailyFX Forum.

01-10-08techs1

01-10-08techs2

Commentary: There is no change to the call for a decline to come under 1.4569.  Preferably price remains below 1.4742 (yesterday’s high) but the bias is bearish as long as price is below 1.4824.  “The rally to 1.4823 is now viewed as wave b of an expanded flat within larger wave 2 of the 5 wave rally that began from 1.4310.  Minimum expectations are for the decline to come under 1.4569 before the next bull leg begins.  Very near term resistance should be strong at 1.4720.  A bearish target is 1.4480.  There is the possibility that the decline does extend much lower (given the strong pessimism surrounding the USD).
   
Strategy:  Bearish, against 1.4823, target 1 at 1.4480 (hold on to half though)

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

01-10-08techs3

Commentary:  As mentioned every day this week, and we must respect the bearish potential, which is great  because the decline fom 114.65 could be the beginning of wave 3 of larger 3 within the 5 wave bear cycle from 124.13.  A break below 107.20 warrants a breakout strategy.  Subjectively speaking, we favor a rally to the 111.50 area (about the 50% retrace of 114.65-108.22 and former congestion) in order to complete wave 2 before the next bear leg begins.  Near term, aggressive traders may adopt a bullish bias above 108.58 but look to flip near 111.50. 
 
Strategy: Looking for a bearish entry near 111.50

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

01-10-08techs4

Commentary: 1.9530 has been our bearish target as the 161.8% extension of 2.1160-2.0353/2.0831 is at 1.9525.  Still, the decline from 2.0101 does not look complete.  The decline from 2.0101 is in its 3rd wave and has the potential to 1.9119, which happens to intersect with the March lows of 2007 at 1.9182.  This bearish bias holds as long as price is below 1.9848.       

Strategy:  Bearish, move risk to 1.9848 (from 2.0101), move target from 1.9530 to 1.9150.

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

01-10-08techs5

Commentary:  We maintain that the USDCHF will continue to rally in wave 2 (within the 5 wave bear cycle from 1.1594).  Expect this rally to test the 1.1375 area (former 4th wave is at 1.1371 and 61.8% of 1.1594-1.1018 is at 1.1374).  This fits with a EURUSD decline to the 1.4500 area before the next leg of dollar bearishness gets underway.         

Strategy:  Bullish, against 1.1018, target 1.1370 

01-10-08techs6

Commentary:  We are not too confident in the bearish USDCAD bias right now.  Previously, we wrote that “either wave B within the A-B-C correction from 1.0248 (or wave 2 within a 1-2-3-4-5 impulse) is complete or close to complete at 1.0080.  Even if price does exceed 1.0080, the next move of consequence is lower towards .9500.  The bearish bias is strong as long as price is below 1.0248.”  The alternate bullish count treats the rally from .9841 as wave 3 instead of c, which means that the rally could accelerate.
  
Strategy: Bearish, against 1.0248, target .9500

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

01-10-08techs7

Commentary:  We have favored recently that wave 3 within a 5 wave bull cycle from .8549 is underway but given the strong signs that the dollar will strengthen across the board for at least the next few days, we are abandoning the bullish bias (for now).  Instead of wave 3 higher being underway, the recent top at .8859 could be a b wave top within a larger wave 2 correction.  This means that wave c will bring the Aussie below .8682 (if only slightly) before the real bull leg begins. 

Strategy: Exit bullish position

01-10-08techs8

Commentary:  We maintain that NZDUSD is about to drop below .7435 to complete a large C wave.  The decline from .7937 to .7507 is a 5 wave decline and is either  wave 1 down in a 5 wave bear cycle or wave A down in a 3 wave bear cycle (either way…a drop below .7507 is expected).  The rally to .7791 is best counted as a 3 wave advance and the 61.8% retrace of .7937-.7507 has held twice.    
 
Strategy:  Bearish, from .7791, target below .7435

 

JTREND is a 4 week rolling pivot. When price is above the rolling pivot, the trend is considered bullish. When price is below the rolling pivot, the trend is considered bearish.       
 
DAILY RSI uses 13 day RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. 
 
DAILY STOCHS uses 13 day SLOW STOCHASTICS in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 70. The trend is considered Bearish if the indicator registers a reading below 30. If the reading is between 30 and 70, then the reading is Flat.
 
200 day ∆: Slope of the 200 day SMA

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

 

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