The GBPUSD and AUDUSD are vulnerable to fresh lows in bearish thrusts from triangles. More permanent bottoms should then form.
We argued for a bottom yesterday, writing that “on the hourly, there are 5 waves down from 1.6039. Even more indicative of a near term bottom is that wave 5 is in 5 waves as well…A push through 1.4710 would be enough to convince us that at least a short term low is in place.” We got the push through 1.4710, and in impulsive fashion (5 waves). Bottom line is that there is enough evidence to warrant a bullish bias against 1.4631. Resistance a few days out is 1.4980 (former resistance), 1.5080 (former resistance), and 1.5170 (38.2 Fibonacci).
As long as price is above 108.36, our preferred count is that wave C of Y (within the W-X-Y from 95.72) is underway towards 116-118 (these are measurements that we discuss in more detail in the morning technicals), which the interest rate outlook favors as well. Short term, 109.23/34 should provide support if needed. This is a Fibo confluence / daily pivot support level. The 200 day SMA at 108.90 may provide support as well.
Although a low appears to be in place (at least temporarily) for the EURUSD, the GBPUSD is vulnerable to a new low from a 5th wave thrust from a bearish triangle (wave 4) before a more permanent low is in place.
The USDCHF is testing the confluence of the 38.2% of 1.3284-.9647 / former resistance. The area should provide some opposition to additional gains. Near term, a head and shoulders top may be forming (look on the 60 minute). A drop below 1.0895 would confirm this reversal pattern and likely lead to a drop to initial support near 1.0750.
We maintain that the drop that ended just below 1.0550 was probably a 4th wave correction. As such, expectations are for a new high (above 1.0726) to complete the advance from .9974. Longer term objectives are at 1.08 (61.8% of the 1.1875-.9055 decline). Look for a top and reversal near there. Coming under 1.0543 would require a reassessment of the situation.
We expect a new low (below .8591) before a more permanent low forms. The AUDUSD is in the exact same spot as the GBPUSD. That is, the recent consolidation is a 4th wave triangle. The 2008 low to this point is .8512 (1/22 low) and reinforces the psychological .85 level as potential support.
5 waves down are already complete in the NZDUSD and a corrective advance is underway now. Wave A of an A-B-C correction is likely complete at .7159. However, notice that the rally is in 3 waves itself. This means that a flat is probably underway. In a flat, wave B retraces a good deal of wave A (sometimes 100% of wave A). Expect a choppy decline in wave B, perhaps as deep as .6950 or lower over the next few days before a strong wave C rally begins.
[B]Jamie Saettele writes [I]Forex Technicals: The Day Ahead[/I], Monday-Thursday (published at 6 pm EST), [I]Daily Technicals [/I] 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.[/B]
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[B]Contact at <[email protected]>[/B]