daily technicals

NZDUSD 25 year Highs - Can It Extend?

Thursday, 28 June 2007 12:41:05 GMT  |  Jamie Saettele, Technical Currency Strategist

• Euro Towards 1.3680
• Japanese Yen Bearish Structure (USDJPY Bullish)
• British Pound Higher - But Nearing End of Bull Run
• Swiss Franc Range
• Canadian Dollar Bull Trend (USDCAD Bearish) Back Underway
• Australian Dollar Bull Returns
• New Zealand Dollar Breaking Out to 25 Year Highs

Commentary:  The push through 1.3437 signals that wave iii, of a 5 wave rally that began at 1.3261, is underway.  An objective is 1.3656, the 161.8% extension of 1.3261-1.3437/1.3371.  The decline from 1.3478-1.3414 is viewed as the 2nd wave correction of the smaller 5 wave advance from 1.3371-1.3478 (which is wave i of 3). 
   
Strategy:  Bullish, against 1.3371, targeting 1.3656

Commentary:  There is still the potential for a drop to the channel support line, drawn off of the 4/19 and 6/8 lows, near 122.00.  The longer term bull trend is bullish above 120.76.  “Coming under 120.76 (as well as channel support near 122.00) would indicate additional bearish potential.”  The decline from 124.13-122.79 is nearly equal to the 123.51-122.23 decline (6 pips difference).  This means that an a-b-c decline could be complete at 122.23.  We are publishing a 5 minute chart this morning to show the potential bullish structure that is forming from 122.23.  An a-b-c correction may end at the 61.8% of 122.23-123.36 at 122.66.         

Strategy: Look for bullish opportunity close to 122.66 Fibo support, 120.76, targeting above 125.00

Commentary:  We wrote yesterday that “it is likely that the pullback is complete as 3 waves are visible and impulsive upside action is visible on the very short term charts.  The correction that just played out is most likely a 4th wave in the 5 wave sequence from 1.9621.  A 5th wave rally is expected to register a new high (above 2.0014) and potentially 2.0130 before a reversal.  Wave 5 (from 1.9927) would equal wave 1 at 2.0086 (measured objective).  Since the rally unfolding will be a 5th wave rally and the euro is embarking on a 3rd wave rally, there is considerable upside potential for the EURGBP.”  Be careful about getting bullish here because the high at 2.0040 satisfies minimum upside expectations.  Wave 5 could extend higher but its not a high probability trade.  

Strategy: Move to flat (better opportunity in EURUSD).

Commentary:  As mentioned here yesterday, “the decline from 1.2424 looks more like a 3rd wave than a wave c, thus we are abandoning the bullish stance.  Near term, it looks like a 4th wave correction is unfolding.”  It is clear now that the 4th wave is unfolding as a triangle.  A thrust lower in a 5th wave is expected.  A larger upward correction is expected following a decline below 1.2258 so now is not the time to get bearish (unless you’re looking for a very short term move).

Strategy:  None

Commentary:  The USDCAD decline appears to be back underway as there are 5 waves down from 1.0733.  The previous 4th wave is at 1.0665 and a small second wave could spike towards there before the decline comes under 1.0548.  This is from yesterday.  “We are expecting wave 4 to end this week (may already be complete).  Price is approaching potential channel resistance, which is just below 1.0800.  We are looking for this correction to continue towards channel resistance before a 5th wave decline brings the USDCAD below 1.0548.”  See yesterday’s chart for the longer term chart.
 
Strategy: None

Commentary:  We wrote yesterday that “the decline ended this morning at .8373 and looks like a sharp 2nd wave correction.  The very short term charts (like the EURUSD) show impulsive upside action.  As such, it it likely that a low is in place at .8373 and that price is headed higher (above .8510) over the next few days.  We’ll look for targets in the days ahead.  A rally through .8421 would increase confidence in the bull argument.”  The Aussie did drop below .8773 and stopped us out but the pair has skyrocketed since.  Support should be strong near .8417.  We still expect a rally through .8510 by next week.

Strategy: Look to align with bulls near .8417, stop at .8355, targets TBD

Commentary: We advocated a cautious bullish stance yesterday and Kiwi has launched higher to fresh 25 year highs.  Looking at the rally from .7237, it is possible that Kiwi is just now entering a third of a third wave that could see the pair test .7848-.8093 in the next couple of weeks (this is the 100%-161.8% of .7237-.7637/.7452).  The alternate count is that an ending diagonal from .7237 is close to complete and that a decline will begin soon.  Remaining above .7571 keeps the former count favored.  
  
Strategy:  Bullish now (breakout), against .7571, target TBD (above .8000)

 

*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend.  JTRENDLT is the longer term trend and uses the last 4 weeks of price data.  JTRENDST is the shorter term trend and uses the last 5 days of price data.  An example is below.  Blue bars denote bullish trend and red bars denote bearish trend.  The chart below is the EURUSD weekly chart. 

 

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