The GBP crosses, notably the GBPCAD, may be reversing from multi-year lows.
The GBPCHF decline is probably near a pausing point. The drop below 2.1181 today completes wave iii of 3 within the 5 wave drop from the July 2007 high at 2.4963. Wave iv of 3 is expected to begin soon (possible underway now although a slight new low is possible) and will probably take the shape of a flat or triangle. 2.1841 (former 4th wave extreme) should act as a ceiling for wave iv of 3.
Last week, we wrote that “price has held above the November low of 1.9011 for 3 months now suggesting that a major bullish base is being formed. This is a pair that we will be looking to buy going forward.” Given the choppy decline of from the December high at 2.0906, testing the bull side against 1.9307 is warranted. The separate legs of the cross (GBPUSD and USDCAD) favor a big GBPCAD rally as well. Support should be strong near 1.9495 (61.8% of 1.9307-1.9799).
The trend remains down as long as price is within the channel from the December high. Potential support begins at 2.0418 and extends all the way below 2.00. Channel resistance is near 2.1750 today and decreases about 20 pips per day. Channel support is near 2.0460 today (and also decreases roughly 20 pips per day).
Additional downside potential exists as long as the GBPNZD remains below the trendline that connects the September 2007, November 2007, and January 2008 highs would indicate a change in trend. A potential terminus for the drop is 2.2717. This is where the drop from 3.0685 is equal to 61.8% of the 3.7067-2.4140 decline. In summary, the trend is still down but a break above the mentioned trendline would warn of a significant reversal.
[B]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
[B] [B]TREND ANALYSIS[/B] is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.
[B]SCHEDULE[/B]
Monday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Tuesday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD
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