daily technicals

USDCAD at 30 Year Lows - 5 Year Decline Close to an End

Friday, 29 June 2007 12:11:37 GMT  |  Jamie Saettele, Technical Currency Strategist

• Euro Bullish but Watch 1.3550
• Japanese Yen Triangle Breakout USDJPY Bearish
• British Pound Stalling
• Swiss Franc Stronger Across the Board
• Canadian Dollar 30 Year Highs (USDCAD Lows) - Objective at 1.0400
• Australian Dollar Topping?
• New Zealand Dollar Breakout Looks Healthy

Commentary:  Our count is tracking well so there is no reason to change our outlook.  “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.”  Be careful at 1.3550, which is the 100% extension of 1.3261-1.3437/1.3371 and the 6/5 high (1.3552).  While we are looking for a test or a marginal break of 1.3680, we are expecting the next big move to be down towards the mid 1.2000’s.
   
Strategy:  Bullish, against 1.3414, targeting 1.3656

Commentary:  We wrote yesterday that “we are publishing a 5 minute chart this morning to show the potential bullish structure that is forming from 122.23.”  As it happened, the USDJPY broke higher from a  bullish triangle, which means that this rally is terminal (will be reversed).  A potential end for this short term rally is 123.72/90, which is the 78.6% of 124.13-122.23/123.72 and the 100% extension of 122.23-123.36/122.77 (rally could reverse prior).  A larger complex correction is playing out from 124.13 (W-X-Y).  After the reversal, we are looking for a drop below 122.23.

Strategy: Look for bearish opportunity at 123.72/90 against 124.13, targeting below 122.23

Commentary:  We wrote yesterday that “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.”  Cable has lagged behind and we will look for a small 5 wave decline in order to get longer term bearish for a return to below 1.9000.  Near term, at least a return to the previous 4th wave is expected (1.9927).

Strategy: None

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.”  The 5th wave is unfolding now and we will look for a rally towards 1.2341 (next week) in order to get bearish.  However, the USDCHF structure is now longer term bearish and suggests that the CHF will outperform ther currencies (especially the GBP).

Strategy:  None

Commentary:  The 5th wave of the decline that began at 1.1879 is close to an end and a multi year advance is likely to begin in the next few weeks.  A potential end for the current decline is 1.0400, which is channel support.  Still, the decline under 1.0548 satisfies minimum expectations.  Since the USDCAD is in a 5th wave, we do not see this as a breakout opportunity.  We are showing the weekly chart with the long term outlook (2 to 3 years).
 
Strategy: None

 
Commentary:  We got the rally through .8510 that we were looking for earlier than expected.  The Aussie may very well extend higher but we see a possible 5 waves up (not very clear) from .8355, so we are moving to flat after getting bullish yesterday.  A correction at least to .8454 is expected.  Our next decision will be based on the structure of the decline from .8521.

Strategy: Move to flat

 
Commentary: No change in Kiwi.  “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.”  Based on the outlooks for Kiwi and Aussie, AUDNZD looks likely to accelerate its decline.  
  
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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