British Pound Nears Breakdown Level

  • EURUSD resistance 1.4015/50
  • GBPUSD breakdown level at 1.6190
  • AUDUSD .8124 key level
  • USDJPY resistance at 97.20

Euro / US Dollar

Staying below 1.4141 keeps the trend pointed down. The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves. Under this scenario, the decline from 1.4141 is a third of a third (powerful) wave decline. Potential short term resistance is in the 1.4015/50 zone.

British Pound / US Dollar

1.6626 held, keeping the bearish count on track. “The entire decline from 2.1160 is most likely unfolding as an impulse (5 waves) and just 3 waves have unfolded. The rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated.” A break below 1.6186 would expose 1.5800.

Australian Dollar / US Dollar

The AUDUSD count shown above is similar to the GBPUSD in that wave v of C may be truncated. The rally from .7823 is in 5 waves but failed to exceed .8269. Usually, this would signal that an entirely new bull cycle is underway. But given the extension of the rallies from .6245 and .6986, this scenario is not probable. Near term, the decline below .7823 supports the topping scenario as does the structure of the rally from .7786, which is in 3 waves.

New Zealand Dollar / US Dollar

My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal, which is common. The NZDUSD unexpectedly exceeded .6474 Friday, thereby negating the short term bearish structure. The bearish implications from the aforementioned evidence remain however.

US Dollar / Japanese Yen

The triangle continues to play out. Wave e of the triangle should complete later this week. There is potential support at 95. There is an alternate bearish in which the drop from 101.50 is a series of 1st and 2nd waves. 93.50 defines the trend (above is bullish and below is bearish). I wrote yesterday that “a rally is likely to begin soon regardless of the larger trend. The triangle count is bullish from here against 93.50 and if the decline from 98.91 is an impulse (which is what the drop looks like), then a second wave rally could reach 97.20.” Favor strength to 97.20.

US Dollar / Canadian Dollar

The USDCAD continues to forge ahead. Staying above 1.1417 keeps the near term trend pointed up. There is potential resistance from the top side of a channel at 1.1800/50 over the next several days.

US Dollar / Swiss Franc

A correction of the gains from yesterday would lead to a drop into the Fibonacci zone, which is 1.0782-1.0875. Long term wave structure is bullish above 1.0630.

[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]