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Euro at Multi Year Lows - Where from Here?

Euro at Multi Year Lows - Where from Here?

2012-01-05 22:05:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Euro / British Pound

Daily Bars

Euro_Lows_body_eurgbp.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

The EURGBP has dropped below channel support and the January low at 8284. I wrote last week that “given the 5th wave interpretation, refrain from getting bearish on a new low. Rather, expect a countertrend rally to develop – resistance would be 8420.” A look at the short term pattern does reveal additional bearish potential but be picky with entries here. Resistance is 8290-8325 and risk on shorts can be kept to 8375. Downside levels of interest are 8220 (short term Fibonacci extension), 8140 (August 2010 low) and 8066 (July 2010 low).

Euro / Australian Dollar

Weekly Bars

Euro_Lows_body_euraud.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

“The drop under 12925 strongly suggests that a 12 month triangle is complete. One would expect an extended decline from a consolidation pattern that consumed so much time.” Daily RSI is just below the level that produced the December 2010 bottom and the risk of at least a short term bounce increases with each tick lower. Still, the next objective is not until the 161.8% extension of the decline from 14087-13110, which is at 12230. The first day of the month high (12695) can be used as risk on shorts now and a bounce would be a candidate to short against that level. Resistance is now 12545/65 and 12630.

Euro / Canadian Dollar

DailyBars

Euro_Lows_body_eurcad.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

I am showing a longer term picture to highlight that daily RSI is at a level that could produce a short term bounce but more importantly to highlight that any bounces should be sold. Again, “the EURCAD break below 13400 and trendline that extends off of the 2010 and 2011 lows gives scope to an extended decline towards the 2011 and 2010 lows at 12777 and 12447.” Resistance is 13080-13120 and risk on shorts can be moved to 13235. Trading above there would shift focus to resistance at 13275, and 13360/75.

Euro / Japanese Yen

Weekly Bars

Euro_Lows_body_eurjpy.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

I wrote last week that “the EURJPY has dropped below the June 2001 low of 9988 and the next major horizontal level is not until the 2000 low at 8894. The combination of the lowest daily RSI reading since September and the trendline that extends off of the 2009 and 2010 lows is likely to give way to a bounce from the current level. A move into 10070-10150 would offer an opportunity to short against the mid December high (10253) for an extended decline.” The bounce lasted until just 10030 and price is now under the mentioned trendline. Resistance is now 9900/45 and any risk on shorts can be kept to 10030. 9500 is a level to watch on the downside and there is channel support at about 9550 this week.

British Pound / Japanese Yen

Daily Bars

Euro_Lows_body_gbpjpy.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

A head and shoulders pattern (continuation…bearish) is now confirmed with the break below neckline support. The downside is favored against 12276 towards the September low (and all time low) of 11680. A Fibonacci extension comes in at 11480 (100% of decline from 10/31 intervention high). Resistance is 12020/30 and 12160.

Australian Dollar / Japanese Yen

Daily Bars

Euro_Lows_body_audjpy.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

The longer that the AUDJPY range contracts, the more I think that a bearish triangle is unfolding from the October low. It’s unclear if the triangle is complete but a break of 7845-7970 would trigger a directional bias. A break higher would shift focus to 8050, 8150, and 8270 (watch the channel resistance). A downside break puts the December low at risk (7698).

Canadian Dollar / Japanese Yen

Daily Bars

Euro_Lows_body_cadjpy.png, Euro at Multi Year Lows - Where from Here?

Prepared by Jamie Saettele, CMT

The CADJPY is in the exact same position as the AUDJPY but the triangle pattern is clearer and trendline resistance has thwarted bulls for several months now (since the 10/31 intervention). 7620 and 7510 are the breakout points. Exceeding the former exposes 7740/50. Coming under the latter sets sights on 7450 and the November low at 7350.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter @JamieSaettele

To be added to Jamie’s e-mail distribution list, send an e-mail with subject line "Distribution List" to jsaettele@dailyfx.com

Jamie is the author of Sentiment in the Forex Market.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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