FOREX ALERTS >>
DailyFX Plus Login

picking tops and bottoms

Article

FX Technical Weekly
Friday, 24 April 2009 21:13:57 GMT  |  Jamie Saettele, Senior Currency Strategist and Joel Kruger, Technical Currency Strategist
Delicious
Facebook

-EURUSD 1.3400 is key level
-GBPUSD completing flat
-AUDUSD and NZDUSD remain beneath highs
-USDJPY breaks support line
-USDCHF tests 200 day SMA
-EURGBP Fibonacci resistance

EURO / US DOLLAR

 04-24-09_techw_eur_1
Classical Outlook: The overall outlook remains unchanged and continues to favor USD strength in the days ahead. The current rebound is still classified as corrective and a closer look at the daily chart shows the market locked in a bear channel. As such, we look for any gains to now be limited to falling trend-line resistance in the mid-1.3300’s with only a break back above 1.3400 delaying outlook.
Elliott Wave Outlook: The EURUSD is nearing the top of a false channel that has formed since the March top.  I maintain that a 3rd of a 3rd wave is down within the 5 wave decline from 1.60.  Fibonacci resistance has been exceeded, which dampens confidence in the bearish bias but the trend remains down as long as 1.34 is intact.  If 1.34 is exceeded, then I will discuss alternate scenarios…which include a B wave triangle or c wave to complete a flat.

 04-24-09_techw_eur_2


BRITISH POUND / US DOLLAR

 04-24-09_techw_gbp_1
Classical Outlook: No reason to be taking positions at current levels with the market caught in the middle of a very choppy range. Our bias however is for an eventual resumption of the broader downtrend to be confirmed on a break back below 1.4395 which should then open a fresh downside extension exposing next key support by 1.4110 (30Mar low). Any rallies should be well capped below 1.4820, but only a sustained break back above 1.5000 would be required to shift outlook.
Elliott Wave Outlook: I wrote last week that “it is possible that a flat is complete at 1.5072.  Coming under 1.4579 would confirm that a top is in place.”  Price dropped beneath 1.4579 and a smaller flat is nearing completion now.  There is resistance from Fibonacci at 1.4838.  The downside is favored as long as price is beneath 1.5072.

 04-24-09_techw_gbp_2


AUSTRALIAN DOLLAR / US DOLLAR

 04-24-09_techw_aud_1
Classical Outlook: The market continues to chop around within a very broad 0.6000-0.7300 range dating back to October 2008. The overall structure remains grossly bearish and given the proximity to the range highs, we like the idea of looking for opportunities to be short the pair in anticipation of retest of the range lows at minimum. The 200-Day SMA has managed to cap rallies over the past several days and we look for the longer-term SMA to once again cap by current levels. A break back below 0.7100 should help to accelerate declines.
Elliott Wave Outlook: I wrote last week that “there is enough evidence to suggest that the entire advance from .60 is complete in the guise of a complex correction (W-X-Y).  The 200 day SMA is at .7330 and defends the high at the same level.  RSI has dropped from above 70 and broken its own trend.”  This analysis remains valid against .7330…a push above would target .75 and a measured objective at .7566.

04-24-09_techw_aud_2


NEW ZEALAND DOLLAR / US DOLLAR

 04-24-09_techw_nzd_1
Classical Outlook: The pair has benefitted from some decent gains on Friday with the market rallying back above 0.5700 thus far. However, the current rally is not expected to last with a lower top sought out below 0.5985 (6Apr high), ideally in the 0.5700 area ahead of renewed selling. Look for the 20-Day SMA to cap with a break back below 0.5600 to reaffirm outlook and accelerate declines back towards initial support at 0.5485. Only a close back above the 20-Day SMA concerns.
Elliott Wave Outlook: There are 5 waves down from .6090, indicating that the long term trend remains down.  An expanded flat correction has unfolded from the February 2 low (.4958).  Favor the downside against .5940. 

04-24-09_techw_nzd_2


US DOLLAR / JAPANESE YEN

 04-24-09_techw_jpy_1
Classical Outlook: The recent break below the 50-Day SMA delays hopes for additional recovery back above 100.00 and now opens the door for deeper setbacks over the coming days towards the 95.00 area. However, trade remains extremely choppy and we do not rule out the possibility of a reversal into the early week back to the upside.  Key levels to watch above and below come in by 98.15 and 95.65.
Elliott Wave Outlook: I wrote last week that “it is worth holding a bearish bias against 100.76.  The long term trend remains down and I am looking for a resumption of that trend.  The downside potential is significant.”  Holding below the 200 day SMA along with the break beneath the daily support line bolsters the bearish case.  Price should remain below 98.92.

04-24-09_techw_jpy_2


US DOLLAR / CANADIAN DOLLAR

 04-24-09_techw_cad_1
Classical Outlook: Despite the sharp pullbacks seen on Thursday, the overall structure still remains quite constructive with the market posting a series of medium-term higher lows over the past several months. A fresh higher low is now sought out by 1.1980 (16Apr low) ahead of the next major upside extension back above 1.3065 over the coming weeks.
Elliott Wave Outlook: If wave 5 within the advance from .9055 has yet to begin, then it should begin soon.  The decline from 1.3068 is in 3 waves and has found support at the 4th wave of one less degree (1.2020).  Coming under 1.1976 would shift focus to 1.1800 (200 day SMA) / 1.1861 (100% extension).

04-24-09_techw_cad_2


US DOLLAR / SWISS FRANC

04-24-09_techw_chf_1 
Classical Outlook: Although the pullback this week has been quite severe, with the market trading from 1.1740 down 1.1350 thus far, our outlook remains constructive with the pair testing some rising trend-line support, and the 200-Day SMA which has proved to be a formidable buoy. A series of higher highs and higher lows over the past several weeks leaves us projecting yet another higher low in the mid-1.1300’s ahead of the next upside extension back above 1.1740.
Elliott Wave Outlook: Like the EURUSD, the USDCHF has resumed its longer term trend towards USD strength.  Bulls are in control as long as price is above 1.1300.  A drop beneath there opens the door for a test of Fibonacci support at 1.0925. 

04-24-09_techw_chf_2


EURO / JAPANESE YEN

 04-24-09_techw_eurjpy_1
Classical Outlook: The cross has now broken down through rising trend-line support off of the 2009 lows and looks set for a resumption of the broader downtrend that has defined trade over the past several months. Any rallies are now seen limited to the former trend-line support now turned resistance currently in the 133.00’s, while below 126.00 should accelerate declines and open the next downside extension towards 120.00.
Elliott Wave Outlook: I wrote last week that “the drop below a support line that had held since February suggests that a complex correction from the October low is complete at 137.46.”  The EURJPY fell to 126.08 before rebounding the past few days.  Staying beneath 130.93 keeps the trend pointed lower in an impulsive fashion (no overlap with waves 1 and 4).

04-24-09_techw_eurjpy_2


EURO / BRITISH POUND

04-24-09_techw_eurgbp_1 
Classical Outlook: While our overall bias is for a much lower cross rate over the coming months, price action at current levels does not warrant any sell recommendations. The market seems content on chopping around for the time being before considering a more significant move. Rallies back above the 100-Day SMA towards the 0.9150-0.9200 area should not be ruled out and we will look to sell on an approach to this level. Back under 0.8785 is required to open fresh drop.
Elliott Wave Outlook: I wrote last week that “it is best to wait for completion of the drop from .9507 and subsequent correction prior to going short against .9507.  This process should take at least a few weeks to play out.”  There is Fibonacci resistance at .9224.  A rally to there may complete a small second wave in an impulse from .9507, which is the bearish line in the sand.

04-24-09_techw_eurgbp_2


EURO / CANADIAN DOLLAR

 04-24-09_techw_eurcad_1
Classical Outlook: While there is still room for some additional weakness, potentially back to the 1.5500 area, we do not expect to see setbacks extend much further with the broader structure still showing mildly constructive. As such, we recommend looking to establish long positions on dips towards 1.5500 over the coming sessions in anticipation of a more significant rally back into the 1.6500 area. Daily studies are approaching oversold which helps to reaffirm near-term basing prospects.
Elliott Wave Outlook: The decline from 1.6983 is sharper than I’d like to see for a correction and the second leg of the drop is extended.  This suggests that the decline from 1.6983 is not a correction at all but rather an impulse that will end beneath 1.5633.  A drop below there would expose Fibonacci support at 1.5359.

 04-24-09_techw_eurcad_2


TRADE LIST

04-24-09_techw_table

*Entry prices for trades that are recommended ‘at market’ are listed as the close price on the date published.

More Articles

Feedback Form