The British Pound remains the weakest of the major currencies and this dynamic likely continues following the GBPUSD failure at trendline resistance. Measured targets are at 1.5300 and 1.5100. Evidence also points to Yen weakness going forward (short term inverse head and shoulders in EURJPY, potential double bottoms in USDJPY and GBPJPY).
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| Joel: The structure remains quite constructive on the monthly chart, with the market having put in 6 consecutive monthly higher lows and potentially now looking for a seventh. The price has also traded above the 61.8% fib retracement off of the major 2008-2009 high-lows, and next resistance in not seen until the 1.5200 area which represents the 78.6% fib retracement off of said move. For now, 1.4175 is critical longer-term support and needs to be broken to end a sequence of consecutive monthly lows and put the pressure back on the downside. Until then, buying dips should be the preferred long-term strategy. |
| Jamie: Staying above 1.4480 keeps the uptrend intact and 1.4600/50 is potential support. If the pair does spring to a new high (above 1.4850), then resistance is anywhere from the psychological 1.5000 to the line that is extended from the March and June highs (at 1.5372 next week). 1.5282 is the ‘breakdown’ level from 2008 and also potential resistance. |
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| Joel: Difficult to determine whether we are in the process of attempting to carve a major lower top in the 1.7000 area ahead of the next drop below 1.3500 or are looking for a higher low ahead of a fresh upside extension beyond 1.7000 and back towards the 2 handle. For now however, at a minimum, it looks as though the market wants to trade lower with sights set on the 1.5000 area over the coming weeks. This, after the triggered major h&s top by 1.6000 on the weekly chart. |
| Jamie: Continue to favor the downside against 1.6130. Price action since the 9/28 low is viewed as a consolidation that will give way to additional weakness. 1.5930 is short term resistance and a wide target area is 1.5070-1.5380 (former resistance levels). The 161.8% extension is near the top of this zone and is a more precise target. A head and shoulders projection is at 1.5150. |
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| Joel: No sign of a let up just yet, with the market still very much trading within a bullish trend. We have already seen 8 consecutive positive monthly closes, and with the market just shy of critical psychological barriers at 0.9000, we could be on the verge of a ninth consecutive positive monthly close. However, the 0.9000 psychological barrier also coincides with the major 78.6% fib retracement off of the 2008 extreme high-lows, and as such, makes for an attractive counter-trend short opportunity. We think that the bull run is very near its end. |
| Jamie: The AUDUSD has reached the midline of its channel and is trading at its highest level since August 2008. Continued divergence with momentum suggests that the decline is in its latter stages. So far, .9100 has held but levels to watch going forward are .9200, .9270, and .9325 (these are former support levels from 2008). Only a drop below .8565 would suggest that top is in. |
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| Joel: The commentary here is the same as with the Aud/Usd…..No sign of a let up just yet, with the market still very much trading within a bullish trend. We have already seen 7 consecutive positive monthly closes, and with the market just shy of critical psychological barriers at 0.7500, we could be on the verge of an eighth consecutive positive monthly close. However, while we do expect to see a test of 0.7500 at this point, the psychological barrier also coincides with the major 78.6% fib retracement off of the 2008 extreme high-lows, and as such, makes for an attractive counter-trend short opportunity. We think that the bull run is very near its end. |
| Jamie: The NZDUSD has reached what was former support from the June 2008 low at .7444. Clearly, the advance is overdone as evidenced by RSI (which is divergent and declined from above overbought). The rally is in its Fibonacci 8th consecutive month. It is possible that the 10/8 high was an important pivot (5 consecutive higher highs and a lower high and low today). .7400 is potential resistance. We’ll monitor the situation closely next week. |
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| Joel: Remains locked in a very well defined downtrend from 2007 with the market putting in a series of lower highs and lower lows. A fresh lower top is now sought out by the 2009 yearly high at 101.45, to be confirmed on a break below the matched 2008/2009 trend lows at 87.15. As such, we look for a direct retest and break below 87.15 over the coming weeks. However, monthly studies are starting to look very stretched and we would not rule out the potential for a major shift in the structure over the coming months. Our recommendation would be to look for opportunities to buy into the next downside extension below 87.15, potentially in the 80.00-85.00 area. |
| Jamie: The USDJPY has broken above a steep short term resistance line and the next level of interest is the top of a 2 month channel / 90.43. Trading through there would confirm a double bottom and project a move to 92.50. |
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| Joel: Although the market has undergone some steep setbacks since the onset of 2009, we contend that the longer-term structure from here is quite bullish, with the current consolidation in the 1.0500-1.1000 area to eventually come to an end with acceleration back to the upside and towards 1.2000. A longer-term higher low is now in the process of taking form above the historic lows by 0.9000 from 2007, and we do not see any additional weakness much below 1.0500. Ultimately, only a weekly close below 1.0500 would give reason for concern. |
| Jamie: Focus remains on 1.0317, which is the 61.8% extension of 1.3068-1.0782/1.1730. 1.0525/45 is a short term resistance zone. Rallying through 1.0670 would begin to suggest an important bottoming out pattern. |
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| Joel: Has extended declines in 2009 to fresh lows by 1.0185 thus far ahead of the latest minor bounce. Despite the downtrend, we contend that the market is in the process of attempting to carve out a higher low above the multi-year lows below parity, ahead of some fresh upside back above 1.1000 over the medium to longer-term. Although the 78.6% fib retrace off of the major 2008-2009 move has been slightly breached, the 1.0200 area could be an ideal spot for the higher low to take form. Inability to hold above 1.0200 on a weekly close basis will however negate recovery prospects and expose a drop below parity. |
| Jamie: The USDCHF daily wave count warns (and has been warning) of a significant low. A rally above 1.0457/channel resistance would confirm a low. Until then, the USDCHF is vulnerable however. 1.0370 is potential resistance. Dropping to a new low (under 1.0180) exposes a measured level at 1.0037. |
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| Joel: Confined to the middle of a multi-week range, with the market most recently failing by the range highs ahead of 140.00 and rolling back over. Our bias is mildly bearish over the coming weeks and we look for a drop back into the lower range by 125.00-127.00 |
| Jamie: The last 6 month’s price action is either corrective or distributive (triangle or head and shoulders). We will not know the outcome until it happens of course but there are clues that the triangle is the correct interpretation. For one, the triangle line held and price has recently broken higher from a short term inverse head and shoulders. This pattern is clear and projects a move to 134.30. Support is at 131.70 and 131.10. Price should stay above 130.80. |
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| Joel: Has broken below the major neckline by 146.80 that we had written about in previous commentary and the market could be looking for some bearish continuation ultimately back into the 120.00’s over the coming weeks. That being said, the aggressive move lower has left daily studies oversold and we would recommend selling rallies over breaks. |
| Jamie: There is potential for a GBPJPY double bottom. Trading through 144.60 would project a move through the 2 month resistance line and towards the 149.00-150.00 area. There is potential short term support at 141.60. Favor the upside against 139.71. |
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| Joel: We still hold onto an overall bearish bias with a medium-term lower top sought out below 0.9500, ideally by the previous week’s 0.9305 high, ahead of the next major decline. However, a break back below 0.8985 will confirm and accelerate declines. |
Jamie: Continue to favor the upside. Bulls are in solid control above .9160. .9212 and .9244 are short term support levels. A potential target is .9466 (which is where the rally from .9076 would equal the .8453-.8843 advance). This is also close to former chart resistance at .9507.
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TRADE LIST *Entry prices for trades that are recommended ‘at market’ are listed as the price at the time of publication
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