Australian Dollar Bullish Pattern - Look for a Test of the High

  • Euro 1.3624 Key Resistance
  • Japanese Yen 120.00 Remains Crowded
  • British Pound Conflicting Signals
  • Swiss Franc Trendline Remains Pivot
  • Canadian Dollar Headed to 1.1000
  • Australian Dollar Bullish Pattern
  • New Zealand Dollar Wedge is Bullish

EURUSD - The EURUSD decline last week was the first weekly decline since the week that ended 3/23. The larger turn scenario that we have been looking for remains preferred as long as the pair is unable to sustain a break above Friday?s high at 1.3622 (reinforced by the 61.8% of 1.3680-1.3533 at 1.3624). A rally above 1.3624 leaves the EURUSD susceptible to a new high in a small 5th wave. A daily close below the 20 day SMA (1.3573 today) would be a strong sign that a multi-week top is in place.

USDJPY - The USDJPY slipped to former resistance (now support) from the 4/30 high at 119.75 this morning. A support line from the 4/25 and 5/1 lows keeps us looking higher for now. A break of this support line would be bearish and give scope to additional erosion to the 119.00 figure (5/1 low at 119.07).

GBPUSD - The break of 2 month trendline support is bearish but Cable could rally to test the line as resistance near the 2.000 figure before more bearish potential comes to the forefront. Disconcerting to bulls is that the decline from the top (2.0131) is in just 3 waves, which is corrective. Still, daily MACD remains bearish (MACD below signal line) and the last two days have closed below the 20 day SMA. Wave structure and other technical indicators are conflicting so it may be wise to look for opportunities elsewhere.

USDCHF - “The longer term wave structure is bullish as the decline from 1.2571 is a double zigzag (inverse of the EURUSD rally). A longer term inverse head and shoulders pattern (May 2006, December 2006, April 2007) is also visible.” Still, a break above the trendline drawn off of the 2/12 and 4/9 highs is required to clear the way for higher prices.

USDCAD - The USDCAD may launch an assault on the 1.1000 figure before a corrective rally unfolds. “There is little doubt that the decline from 1.1825 is a 3rd wave. Therefore, any rally should be treated like a correction as a 5th wave decline will eventually take the USDCAD to lower levels. Initial resistance is the 4/24 high at 1.1246. With RSI putting in a momentum extreme on 4/25 at 19.91 (daily), downside potential looks limited as the next few weeks may be dominated by sideways/corrective trading in order to correct the oversold condition (daily). The next support level is the 9/01/2006 low at 1.1028 followed by the 261.8% extension of wave 1 (1.1879-1.1562) - at 1.1000.”

AUDUSD - This morning?s price action is very bullish following the decline from the top is in a corrective 3 waves - thus we are suspending our bearish forecast. The pair has pushed through the midpoint of the short term channel (see chart below), which gives scope to a test of channel resistance near .8300 (more bullish potential exists on a break above .8300). Short term support should be strong at a reaction high from Friday at .8222.

NZDUSD - The decline from the top (.7491) takes on the shape of a wedge and is bullish. A break through the top of the wedge near .7400 would signal that price is likely headed for a re-test of .7491. Friday?s candle is a hammer (bullish reversal) and supports this outlook. Last week?s low needs to hold (.7330) for bulls to remain in control.