Dollar Fails at 1.46; Keeps Euro Trend Up

[DailyFx]

The EURUSD bottomed in the Asian session last night at 1.46, keeping the short term trend up against that level.









In last night’s update, I wrote that “It is wise to abandon the bullish bias at this point. What I thought was a 4th wave is taking far too long. Although price has yet to slip below the parallel Elliott channel, it should soon. A reason to at least turn neutral at this point is the overwhelming agreement that the ‘bailout’ from Paulson and co. is bad for the US dollar. One headline of many appeared the day of the recent top (Sep. 22). Such uniform thinking is rarely correct. From a technical standpoint, the rally from 1.4150 is close to equal with the rally from 1.3877-1.4546. Equality among waves is typical of corrective behavior. Price should remain below 1.4745 if indeed a larger EURUSD is underway.” The EURUSD immediately reversed and exceeded 1.4745. The dip to 1.46 may be the extent of the USD rally from the ‘headline extreme’. Holding above 1.46 keeps the trend up. The best count at this stage is a triple combination. The first two legs are 661 and 714 pips…traveling 661 pips in wave Z places the EURUSD at 1.5264. This is in the vicinity of the 61.8% correction of the decline from 1.6040. Confidence in directionality is low right now…as it usually is during a correction.




Don’t let the USDJPY lull you to sleep. This is what it does before it makes a major move. The bearish level in the sand remains 106.90. Staying below there keeps the short term trend down potential for the decline to accelerate in a 3rd of a 3rd that will eventually break below 103.52 (and much lower). Confidence in the bearish bias is waning with each passing session though.




Cable is in the same position as the EURUSD. The count is the same as is its position relative to the parallel Elliott channel. I took a shot at calling a top last night, but was clearly wrong. Staying above 1.8456 keeps the uptrend intact. The next level of resistance is at 1.8781.




The USDCHF decline from 1.1422 is in 3 waves and possibly the first wave of a triangle of flat. The other option is that the decline is the first wave in a complex correction; and that the advance from 1.0686 is wave X. In this case, the USDCHF works lower from current levels.




The USDCAD is completing 5 waves down from above 1.08. The impulsive drop confirms the larger bearish bias and call for much, if not all, of the advance from .9055 to be retraced. Support is at 1.01.




Having reached former support, the B wave could be complete at .8275. However, B waves are rarely this clean. Watch for a flat or a triangle. In the case of a flat, wave B would end below .8275; in the Fibonacci zone (.8247-.8076).




To repeat from yesterday…“the NZDUSD may be nearing the end of a 3 wave movement from the low. While this could be the first leg in a triangle or flat, risk is quickly shifting to the downside.” It is possible that the NZDUSD turns up from here to complete a ‘5’ (5 waves) from .6435 but the position of the AUDUSD suggests that the small B wave corrections are already underway. As such, expect additional weakness in wave B.





Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.



Contact at jsaettele@dailyfx.com