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AUD, NZD, and CAD Follow through on Reversals

AUD, NZD, and CAD Follow through on Reversals

2015-10-09 19:17:00
Jamie Saettele, CMT, Sr. Technical Strategist
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  • EURUSD could see resistance at 1.1435/65
  • Commodity currency trend reversal follow through
  • USDCHF triangle support possible near .93

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EUR/USD

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-“EURUSD continues to hold up at the line that extends off of the 2000 and 2001 lows. The slope of this line is similar to the slope of the line that connects the 1995 (synthetic rate) and 2008 highs. A parallel extended from the 2000 low creates a channel so don’t dismiss resistance breaks on the daily (from long term support).”

-“EURUSD faces a big test from the top of the range and 200 DMA. A breakout would target 1.1811-1.2086.” The rate broke out but failed to extend higher and the weekly chart is left with a nasty bearish reversal candle at the 52 week average. Is this how the broader decline resumes or is a wider period of range activity in order? The latter seems more likely given the presence of the mentioned long term trendline support. Support is estimated in the mid-1.0800s. Resistance is estimated in the mid-1.1400s (May and June high are 1.1435/65). A break on either side would indicate potential for a larger move.

GBP/USD

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-The week that ended 8/28 engulfed the prior 6 weeks and may set the stage for a test of 1.4500 given the false break above the line that extends off of the 2014 and 2015 highs. The false breakout took place at the 55 week average, which is downward sloping and gives credence to a long term bearish view.

-“A 3+ month head and shoulders top also completed in late August as well. This rally has resulted in a re-test of the neckline. If the bigger move is lower, then GBPUSD needs to roll over now.” Focus is on the mid 1.4000s. 1.5089, 1.4960 and 1.4860 are possible supports for counter trend moves (bounces). Given potential for a trending move, consider SSI as a filter.

AUD/USD

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-“COT observations and a tweezer bottom candlestick pattern on the weekly chart indicate reversal risk towards .7440.” AUDUSD is well on its way to .7440, which will probably prove ephemeral as resistance. Look towards .7532-.7625, the zone defined by the February and March lows.

NZD/USD

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-“A rally to .6710/50 may take place before NZDUSD obtains the long term double top target (also be aware of the 2004 and 2006 lows at .5909/27 and the 1999 high at .5673.) as the rate has spent the last 5 weeks at long term support and the August 24th crash low is still ‘the low’. Exceeding .6455 (daily close basis) would trigger a 4 week double bottom. NZDUSD is also trading ‘well’ in the face of deeply negative sentiment towards commodities.”

-Like AUDUSD, a level that could influence for a pause in the rally is nearby (.6707/70) but ‘real’ resistance probably isn’t until .7150 (March low and 61.8% of decline from April high).

USD/JPY

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-“June’s trade produced a monthly key reversal in USDJPY.” USDJPY has snapped back but a break above the long term resistance confluence (uptrend resistance and the line from the 1995 and 2005 highs) is still needed in order to minimize downside risk.”

-“Weakness below 123 has triggered a failed short term bullish pattern and consequently a bearish signal. Given where USDJPY is declining from (significant long term resistance), this decline could be precipitous.” Precipitous indeed. USDJPY is holding its 55 week average (was also support in 2014). The rate last closed below this average in October 2012; over 40 big figures ago! In any case, weakness below the long term lower parallel is needed in order to signal that a MAJOR behavior change has taken place and that USDJPY is headed back towards long term support near 100. Until then, embrace the range. Shorter term, ‘fake out risk’ was highlighted in this video on 10/1.

USD/CAD

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

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-“The 61.8% retracement of the 2002-2007 decline looms at 1.3462 but a top could be in at this week’s high given the 9/24 reversal and divergence with Crude Oil.”

-“The high this week (week that ended 10/2) is a few pips shy of the mentioned long term Fibonacci retracement at 1.3462. A weekly key reversal has also formed. USDCAD may have just made an important top.”

-In the same vein as AUD and NZD, CAD is nearing a level that could influence for a pause in the move. The level in question is the March high at 1.2834 but the broader trend is now down.

USD/CHF

Weekly

AUD, NZD, and CAD Follow through on Reversals

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“USDCHF traded to its best level since March this week and formed a weekly key reversal. This action serves as a warning to bulls that the rally from May is nearing completion. Major resistance is seen slightly higher from the 14 year trendline and 2012 high of .9971 over the next few weeks but the USDCHF top this week was right at the 78.6% retracement of the March-May decline.”

-Alternating and contracting moves since March may compose a triangle. The implication is that USDCHF tightens a bit more before attempting a directional move. Which way? I don’t know but if it’s higher then the 2006-2008 trendline comes into play and a break above there would be significant (as in going to 1.20+). Near term risk looks lower towards .9300.

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

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