Critical Levels for the Dollar

· Euro 1.3188 is Key
· Japanese Yen Hits Fibo
· British Pound Pivot Zone is 1.9260-1.9360
· Swiss Franc Breaks Down
· Canadian Dollar Bottomed?
· Australian Dollar Reaching for 61.8% Fibo
· New Zealand Dollar Correction Has Equal Legs

EURUSD – Coming under 1.3140 yesterday keeps the bearish structure intact and suggests that a wave 3 down is underway. Price is very close to the short term resisting trendline, which limits upside risk. The head and shoulders pattern also points lower. 1.3188 is key to the immediate bearish case. A decline below 1.3072 opens up the door for an assault on 1.2865.

USDJPY – As mentioned here yesterday, a rally to 117.63 / 118.00 (117.98 is where the rally from 116.20 would equal the 115.15-116.91 rally) would possibly complete a 4th wave correction and give way to another bout of weakness to below 115.15. The pair reversed this morning at 117.70 (200 day SMA also at 117.51). A rally above 117.63 suspends the immediate bearish outlook and shifts focus to the next fibo resistance at 118.40. Coming under 116.91 increases confidence in a 5th wave decline to below 115.15.

GBPUSD – The GBPUSD is not as clear. The decline from 1.9675 to 1.9183 is clearly impulsive and the rally since then has clearly been corrective. However, there may be another leg higher in this correction, possibly to the 61.8% of 1.9675-1.9181 to 1.9486. Recent congestion provides the pivot zone that will help us establish a bullish or bearish bias in the near term. A rally above 1.9361 argues for a continued rally towards the confluence of the mentioned fibo at 1.9486 and previous congestion at 1.9473. A break below 1.9260 strongly suggests that 1.9183 will be taken out as well.

USDCHF –The next move of consequence should be in a wave C rally (inverse of EURUSD) to above 1.2575. The push through Friday’s high at 1.2264 bolsters the bullish scenario. Former resistance at 1.2264 is now support and has held as such this morning. A rally above 1.2297 should extend to the 161.8% extension of 1.2109-1.2259 / 1.2159 at 1.2399. Short term support is at 1.2230 and 1.2159 must hold in order to keep the bullish structure intact.

USDCAD – The long term bearish bias remains intact. The decline off of the top of the 2 year channel combined with the outside monthly reversal favor the downside. Ultimately the decline from 1.1879 should come under 1.0927 to complete a 5th wave. The rally from 1.1564 has retraced 78.6% of the 1.1879-1.1564 decline in a 2nd wave. The next few weeks should see price come under 1.1564 and possibly even 1.1250-1.1326 – which marks the 138.2% to 161.8% extensions of 1.1879-1.1564 / 1.1761. 1.1880 is critical resistance. A push above, while not expected, targets the 1.2000 figure. Coming under 1.1731 bolsters the bearish outlook.

AUDUSD – The AUDUSD wave 4 correction has extended to above the 50% of .7895-.7680 at .7787. Price must remain below .7840 in order to keep the bearish structure intact but the 61.8% at .7812 should provide formidable resistance. The upside looks limited at this point and price should come under .7680 in a 5th wave decline before a larger upward correction takes place.

NZDUSD – Kiwi has also corrected recent weakness from .6720 in a 4th wave. The 61.8% at .6914 should be formidable resistance. The pair may reverse from current levels (.6897) as first and third legs of the 4th wave correction are equal (at .6897). The next move of consequence should be below .6720 in a 5th wave decline. The bearish structure remains intact as long as price remains below .6970.

Glossary of Terms
CCI(20) – 20 day Commodity Channel Index
> 0 – bullish
0 > – bearish
> 100 – extremely bullish
-100 > - extremely bearish
RSI(14) – 14 day Relative Strength Index
> 50 – bullish
50 > – bearish
> 70 – overbought
30 > - oversold
MACD ? - MACD slope (MACD – MACD[1])
> 0 – bullish
0 > - bearish
Mom(21) – 21 day Momentum
> 0 – bullish
0 > - bearish
ATR(14) – 14 day Average True Range (volatility)
Medium – 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low – 25th percentile* >
*measured against past 3 months