Euro Little Changed
Japanese Yen Trendline Support (USDJPY Resistance)
British Pound Breaks Above 2.0000
Swiss Franc 1.2100-1.2300 Pivot Zone
Canadian Dollar Likely to Correct Some Strength
Australian Dollar Digests Recent Gains
New Zealand Dollar Bid Above .7400
EURUSD The EURUSD has taken out resistance from the March 2005 high as well as the 1.3500 figure. The next level of chart resistance is the 2004 high at 1.3666. There is no change in the call for a longer term top due to the 7 wave rally (which is a double zigzag?.two zigzags connected with an X wave labeled W-X-Y) from 1.1638. A break of 1.3666 would expose 1.3799, which is where wave W (1.1638-1.2979) would equal wave Y (beginning at 1.2458). Near term, the pair has run into resistance from a 2 month upward sloping channel line. Some consolidation in a 4th wave is expected support at 1.3486. The near term bull case is strong above 1.3453. Coming under 1.3453 is the first sign that a more significant top is in place.
USDJPY The USDJPY reversed from resistance off of a trendline drawn off of the 2/12 and 2/23 highs. A break above this line (yesterdays high at 119.84) exposes the 78.6% of 122.17-115.14 at 120.67. There are conflicting signals. Price above 118.20 keeps intact the series of higher lows from the March low at 115.14. On the daily, CCI is crossing below 100, which often signals a reversal.
GBPUSD Cable traded to a 15 year high today. 5 waves from 1.9589 are close to complete (see chart below) and a larger degree 5 wave structure may be nearing an end from 1.9182. Both monthly and weekly R2 levels are 2.0070 and both the 240 minute and daily charts show overbought oscillators that are divergent with highs. Cable may very well work higher and may be tracing out a 3rd wave with a measured objective at 2.0229 but the risk of a reversal is high and rising with each tick higher.
USDCHF The break below short term trendline support warrants a short term bearish bias as long as price remains below 1.2187. However, the longer term turn wave structure supports a reversal (higher) as long as 1.2027 remains solid. A rally above 1.2281 would give credence to this view and suggest that an important low is in place at 1.2027.
USDCAD The USDCAD continues to break down following the break of parallel channel support. The next potential support level is the 11/28/06 low of 1.1286. Daily RSI has reached oversold territory for the first time since April of 2006, so a bounce towards near term resistance at 1.1411 may be in order. The bearish case is strong below 1.1487.
AUDUSD The AUDUSD continues to remain bid close to the 1990 high of .8351. Daily oscillators (CCI and RSI) are overbought and divergent with recent highs. Also, the break that occurred at .8000 was from a triangle and triangle breakouts are terminal (meaning that they are eventually retraced). The daily chart below shows the triangle (a-b-c-d-e) and the 5 wave rally that has ensued and RSI. With daily oscillator action, an extreme risk reversal rate (1 month 25 delta options) and the Aussie at former longer term resistance, we are looking for a reversal. Coming under .8232 signals that we are on the right track. Yesterdays shooting star candle does have bearish reversal implications.
NZDUSD Kiwi looks poised to challenge the 2005 high at .7469. A Fibonacci turn date was Friday but the longer term nature of the analysis allows for a deviation of 4 days. Daily RSI is overbought and divergent as well. Coming under .7374 would be the first sign that a top is in place.