-GBPCHF to test JUne high
-GBPCAD, GBPAUD, and GBPNZD to break lower before forming important lows
British Pound / Swiss Franc
The GBPCHF is resisted by the 50% retracement of the decline from 2.0974 but additional strength looks likely. For one, daily RSI is not overbought nor has the indicator indicated an overbought condition since the rally from the December 2008 low began. Above 1.8123 (June 24 high) exposes the 61.8% retracement at 1.8735. Only a drop below 1.7385 would suggest that a top is in place.
British Pound / Canadian Dollar
A drop below 1.6711 in the next several months is possible but the GBPCAD is in the process of forming an important low as evidenced by divergence with weekly RSI at the most recent low. Conditions remain bearish as long as price is below the resistance line drawn off of the 2007 and 2008 highs.
British Pound / Australian Dollar
The GBPAUD is near the bottom of a decade + range. Like the GBPCAD at its most recent low, weekly RSI is divergent and suggests that the long term decline is near completion. A new low and possibly even a test of 1.8750 is not out of the question. In the event of a break below 1.9688, be on alert for formation of a low.
British Pound / New Zealand Dollar
Since early 2008, the GBPNZD has traded in a contracting range that looks like a triangle. Triangles typically give way to terminal thrusts. In other words, the decline from a bearish triangle results in the formation of an important low. Expectations then are for a drop below 2.4104 prior to formation of a long term low.
[I]Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
Please send comments about this report to <[email protected]>[/I]