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FX Technical Weekly
Friday, 03 April 2009 21:14:09 GMT  |  Jamie Saettele, Senior Currency Strategist and Joel Kruger, Technical Currency Analyst
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-EURUSD in limbo as range persists
-GBPUSD could break 1.50 soon
-AUDUSD and NZDUSD just shy of critical levels
-USDCAD may have put in a bottom
-EURGBP wave structure now bearish

EURO / US DOLLAR

 04_03_09 - techw - eur - table
Classical Outlook: Has finally broken out from the latest sideways trade, surging above recent consolidation highs at 1.3345 to 1.3515 thus far. The 61.8% fib retracement off of the 1.3740-1.3115 move comes in by 1.3500 and we would expect to see some pullback from here with the market still caught in some broader directionless trade. Next key level to watch above comes in at 1.3595 (27Mar high), while a break back below 1.3365 would be required to take the short-term pressure off of the topside.
Elliott Wave Outlook: As long as price is below 1.3740, it is assumed that a wave 2 high is in place within a 5 wave decline from 1.4720.  A push through 1.3740 does not alter the long term bearish outlook but does suggest that the EURUSD will test Fibonacci resistance at 1.38 and perhaps the psychological 1.40 area.  Coming under 1.3350 would inspire confidence in the downside.

 04_03_09 - techw - eur - chart


BRITISH POUND / US DOLLAR

 04_03_09 - techw - gbp - table
Classical Outlook: Although recent price action would suggest that we could be in the process of carving out a material base, we are not convinced just yet and still see the market locked in a more significant bear trend.  A break and close back above 1.4990 (9Feb high) would be required to shift us into the bullish camp and until then, we continue to look for opportunities to sell into rallies in anticipation of a resumption of setbacks. We will wait for daily readings to cross into overbought before considering fresh shorts.
Elliott Wave Outlook: Price action since 1.35 is a 4th wave that will end as either a triangle or flat.  IF a triangle is underway, then wave C should top within the next few days and wave D would then work lower towards 1.40.  A flat would exceed 1.50.  With the GBPUSD in a correction, it is difficult to control risk.

 04_03_09 - techw - gbp - chart


AUSTRALIAN DOLLAR / US DOLLAR

 04_03_09 - techw - aud - table
Classical Outlook: Recent price action changes the picture with the prospect of a major double bottom coming back into play. The neckline comes in by the 2009 highs at 0.7270, with a break above to accelerate and potentially expose a double bottom objective back above 0.8000. However, calling for a major bottom is still pre-mature and we are just as likely to see a test of the 0.7270 highs and subsequent failure back into the prominent range that has defined trade for the past several months.  At a very minimum though, we would expect to see a test of 0.7270 over the coming sessions.
Elliott Wave Outlook: Exceeding .7272 would potentially complete a complex correction from the October 2008 low at .60.  Look for resistance near .75

04_03_09 - techw - aud - chart


NEW ZEALAND DOLLAR / US DOLLAR

 04_03_09 - techw - nzd - table
Classical Outlook: The weekly highs coincide with the 78.6% fib retracement off of the 0.6085-0.4895 (Dec-Mar) move and this is the last chance for a reversal before the likelihood of a full 100% retracement to 0.6085. Back above 0.5900 should open a direct retest of the 2009 highs which come in at 0.6035, while failure to do so will put the focus back on the downside. A break below Friday’s 0.5770 would confirm topside failure.
Elliott Wave Outlook: The larger structure is bearish as long as price is below .6090 (5 waves down from there).  My working assumption is that the long term decline has resumed as long as price is below there.  Given the proximity of .6090, confidence is low at this point.

04_03_09 - techw - nzd - chart


US DOLLAR / JAPANESE YEN

 04_03_09 - techw - jpy - table
Classical Outlook: We continue to favor additional upside over the coming sessions with the market having finally taken out psychological barriers at 100.00, to expose the major 87.15 double bottom objective by 104.00. Only a close back under 98.20 delays. Thursday’s close above the 200-Day SMA (first time since September 2008) reaffirms bullish outlook.
Elliott Wave Outlook: The USDJPY has traded through the 200 day SMA (although there is no daily close above the SMA yet) and focus is now on the 61.8% retracement of the decline from 110.71 at 101.  Remember, the long term wave structure is bearish, as evidenced by the break from the triangle on the monthly chart.  However, only a drop below 98.19 would begin to suggest that a top is in place.

04_03_09 - techw - jpy - chart


US DOLLAR / CANADIAN DOLLAR

 04_03_09 - techw - cad - table
Classical Outlook: The market has been trading within a bull channel over the past several weeks with the latest dips supported ahead of channel support at 1.2190. Look for a medium-term higher low to carve out by 1.2190 ahead of a fresh upside extension back towards and through the key 2009 highs by 1.3065 from 9Mar. We expect any additional weakness to continue to be supported by the rising trend-line which currently resides by 1.2200. Back above 1.2455 should act as a catalyst for a resumption of the broader up-move.
Elliott Wave Outlook: There are 5 waves up from 1.2190, therefore favor the upside as long as price is above that level.  If a low is in place, then the USDCAD should work higher towards the triple top above 1.30.

04_03_09 - techw - cad - chart


US DOLLAR / SWISS FRANC

04_03_09 - techw - chf - table 
Classical Outlook: Setbacks have found support for now as expected in the low 1.1300’s which acts as previous range resistance turned support. From here we see risks for a resumption of gains back above 1.1500 and through the recent trend highs at 1.1550. A confluence of moving averages in the 1.1500’s initially capped rallies but the next attempt to the topside should easily exceed the SMAs. Only back under 1.1165 negates outlook and gives reason for pause.
Elliott Wave Outlook: Like the EURUSD, the USDCHF may have resumed its longer term trend towards USD strength.  Near term, bulls are in control as long as price is above 1.1157.  Coming under there does not alter the long term bullish outlook, but does suggest that the USDCHF will test Fibonacci support at 1.0925 and maybe even 1.07.

04_03_09 - techw - chf - chart


EURO / JAPANESE YEN

 04_03_09 - techw - eurjpy - table
Classical Outlook: The market has rallied above the previous weekly highs by 134.55 into the end of the week to negate the late March bearish gravestone close. However, daily and weekly studies are starting to approach overbought levels and despite the break to fresh 2009 highs, the overall structure still remains grossly bearish. We look for a topside failure in the coming week to open a resumption of the broader downtrend.
Elliott Wave Outlook: The EURJPY is working higher but the advance from 112.08 is viewed as the final leg of a large corrective rally.  Only a drop below 126.39 would suggest that a top is in place.

04_03_09 - techw - eurjpy - chart


EURO / BRITISH POUND

04_03_09 - techw - eurgbp - table 
Classical Outlook: A series of 4 consecutive weekly higher lows has officially been broken to suggest a medium-term lower top now in place by 0.9495 ahead of the next major downside extension back through 0.8635. Look for rallies in the coming week to be easily capped below 0.9340. Next key short-term support comes in at 0.8950 while only back above 0.9340 negates bearish outlook.
Elliott Wave Outlook: The drop below .9072 suggests that a larger correction or even impulsive decline is underway from .98.  Wave structure is now bearish against .9498. 
 

04_03_09 - techw - eurgbp - chart


EURO / CANADIAN DOLLAR

 04_03_09 - techw - eurcad - table
Classical Outlook: While the overall structure remains grossly bullish, gains have stalled out for now and the cross seems content on entering a period of consolidation. Weekly studies are neutral with key level to watch over the coming week by 1.6830 and 1.6385. A break above or below will be required for clearer directional bias. It is however worth noting that a series of 7 consecutive weekly higher lows has been broken which could open the door for some setbacks ahead.
Elliott Wave Outlook: From last week: “Decline from 1.7522 is in 3 waves and that high should be exceeded.”  There is no change to the outlook.  Staying above 1.6320 keeps the bull strong.

 04_03_09 - techw - eurcad - chart


TRADE LIST

04_03_09 - techw - table2

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

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