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EURUSD Reverses from Above February Low; Look Higher Near Term

EURUSD Reverses from Above February Low; Look Higher Near Term

2014-06-06 20:23:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:
  • EURUSD volume considerations
  • GBPUSD trendline confluence test
  • NZDUSD responds to 50% retracement

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EUR/USD

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-Long term, a failed breakout and top would keep with the pattern of 3 year cycle tops. 1.3750 is an important reference point (year open).

-As outlined in the Daily Technicals, EURUSD resolved a recent triangle with a terminal thrust and reversal. Several developments suggest that EURUSD is headed higher for at least several weeks. The reversal occurred from just above the 2014 low and near the 52 week average (which exhibits a positive slope but momentum has been trending down since August).

-Volume may help in gauging how important this low is. The lows registered in November 2013 and July 2013 were accompanied by huge peaks in transactions and volume. This week’s transactions are on par with the November low but this week’s volume is not. The implication is that this low isn’t as strong as the November and July lows (the doing of smaller traders…think volume / transactions). There are 3 points to watch for resistance moving forward…1.3750/60, 1.3800, and 1.3840.

GBP/USD

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-GBPUSD is showing signs of a top. The rally failed the week that ended 5/9 just above the August 5, 2009 close (high day for the entire move off of the 2009 low). The ensuing decline was sharp and found support at the line that extends off of the November, February, and March lows.

-That line broke 2 weeks ago (can be seen on the daily) and provides the best (not earliest) evidence yet of a broader shift. This week’s rally stalled at a trendline confluence. The development makes this week’s high (post NFP) the pivot in determining near term trend.

AUD/USD

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-The combination of the .9400 figure and weekly RSI failing near 60 indicates a lot of overhead to punch through. Since the 2011 top, each RSI failure near 60 has led to a top or topping process (range for several weeks then a breakdown...that may be the case now).

NZD/USD

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“Don’t forget about the line that extends off of the 1996 and 2007 highs. That line crosses through the 2008, 2011, and highs as well. In 2011 (record free float high), the rate surged through the line in late July before topping on August 1st.”

-After trading primarily between .8500 and .8700, NZDUSD topped right at the mentioned line from 1996. The top also came in just above the August 1, 2011 close (that was the day of the free float record). The weekly key reversal and follow through this week bolsters the idea that NZDUSD has topped. The rebound from support this week (former high and 50% of rally from February low) give scope to a move towards resistance near .8600.

USD/JPY

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“USDJPY has bounced from the line that extends off of the February and 3/14 lows. The rally from the February low channels in a corrective manner and makes 104.12 important from a bigger picture bearish perspective.”

-“There is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55. Of course, the path to get to that level is far from clear.” 103.25 is in focus as resistance. Watch the line that extends off of the January and April highs.

USD/CAD

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.

-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.

-Action since the January high may compose a complex correction (triple zigzag in this case). The turn higher from channel support suggests that the long term bull has resumed.

USD/CHF

Weekly

EURUSD Reverses from Above February Low; Look Higher Near Term

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-The same momentum considerations that apply to EURUSD apply to USDCHF (the March price low occurred with RSI above 30). Weekly RSI has been unable to register an ‘oversold’ reading despite the market declining for almost 2 years.

-“Patter wise, the decline from the 2012 high ‘fits’ well as a 3 wave correction with wave C as an ending diagonal. When (if) this market turns is up in the air.” USDCHF found top this week from just above the February 2013 low at .9020. The reversal probably caps USDCHF for at least a few weeks. Supports are seen at .8860 and .8800. In summary, the rate is probably capped for a few weeks before another rally attempt.

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

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