Currency Crosses: Technical Outlook 03-17
It looks as though the EURUSD has completed wave D of a triangle that has been underway since December 2008 (last day of that month). If wave E is underway, then weakness should extend to former resistance (which is now likely support) at 8850 or 8750.
Euro / Canadian Dollar
No change: “The EURCAD remains well within its bearish channel. Until a break of a pivot high, it is dangerous (if not foolish) to go long. The bullish pivot is 14113. The next significant price level on the downside is not until the 2007 low at 13284.”
Euro / Australian Dollar
Near term, the EURAUD may be completing a diagonal from 15331. The bounce from 14804 would be wave 4 with wave 5 underway now. If this count is correct, then the pair would drop to a new low prior to reversing higher. Only a move above 15208 would indicate a reversal.
Euro / New Zealand Dollar
The EURNZD pair has been basically in a range since mid January and only a move above 19881 would clear the top of the range and indicate a reversal. The next major downside level is 18181 (2008 low).
Euro / Japanese Yen
I wrote last week that “a complex correction can be counted from the low, so the correction may be complete. Also, reversing from the former 4th wave extreme (circled) is common.” Since the top at 12525, the EURJPY has declined in an impulsive manner and rallied in 3 waves. Favor the downside against 12525 and target a drop below 12320. 12260 would be initial support on a drop below there, followed by 12140.
British Pound / Japanese Yen
The GBPJPY has tested and slightly exceeded the 38.2% retracement of the decline from 15076. The level is reinforced by the wide congestion zone that extends to 14360. Given the bearish wave counts in the other Yen crosses, I am cautiously bearish GBPJPY. A drop under 13710 would probably indicate that a top is in place.
Canadian Dollar / Japanese Yen
I wrote Monday that “one more high in order to complete a diagonal from 8691 cannot be ruled out. A drop below 8750 would suggest that a top is in place.” We got that high today and the CADJPY looks awfully heavy at its current juncture. Favor the downside.
Australian Dollar / Japanese Yen
The AUDJPY is in a similar situation. A month long correction may be complete although additional strength cannot be ruled out until price breaks below 8224. 8484 would be the next level of potential resistance. As mentioned Monday, “regardless of the short term picture, I am bigger picture bearish against 8625.”
New Zealand Dollar / Japanese Yen
The NZDJPY pattern is the most complex (with respect to the rally from the February low). At this juncture, the rally would count as a triple 3 complex correction. However, I prefer confirmation before taking action based on a complex pattern. Watch the short term support line. A drop below would signal a short opportunity against 6500.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to firstname.lastname@example.org. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
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