There are several crosses that are worthy of attention right now. The EURAUD and EURNZD, which are breaking above multi-month trendlines (resistance), headline the list.
[B]Euro / British Pound[/B]
Having reached the April 24 high of .9085, be prepared for a pullback. Demand should prop up the pair at .8975, and .8940. .8703 is the bull defining level. .9269 and .9507 are target areas. Watch the lower parallel, which could be support. I have labeled the decline from .9807 as A-B-C, which is corrective. However, the decline could also be the first part of a larger consolidation such as a triangle or flat. Keep this mind as the EURGBP approaches the mentioned points (.9269 and .9507).
[B]
Euro / Swiss Franc[/B]
No change from Friday - “There is little to say about the EURCHF technically and there will not be until the pair breaks from the triangle. The fight between bulls and bears wages on in a triangle that has been underway since October. Triangles are typically continuation patterns, so a downside break would seem to be more probable. Still, forecasting is an exercise in probabilities rather than certainties so jump the gun at your own risk. Pushing through either the top of bottom line triangle line would present a breakout opportunity.”
[B]
Euro / Canadian Dollar[/B]
The series of lower lows and lower highs in the EURCAD since the December 2008 high takes the form of a wedge, which is bullish. The pair is testing wedge resistance for the second time this month (9/14 was the other time). Be on the watch for a break higher. 1.5400 remains the pivot since we can’t be sure yet that 1.5617 will hold.
[B]
Euro / Australian Dollar[/B]
The EURAUD shows signs of a bottom. Trendline resistance has given way. This development is all the more significant given the divergent readings with momentum at the recent low (not shown). Favor the upside against the low. The rally could be substantial.
[B]
Euro / New Zealand Dollar[/B]
EURNZD is similar (approaching trendline and divergence at the low) but I would say more bullish term than EURAUD at least in the short because the decline from 2.1250 is an ending diagonal (a.k.a diagonal triangle). Ending diagonals tend to give way to quick reversals and are often fully retraced. This guideline suggests a return to 2.1250 rather soon.
[B]
Euro / Japanese Yen[/B]
At this point, we don’t know if the EURJPY (and all Yen crosses for that matter) range that has consumed the past many months is a consolidation or reversal pattern. As such, focus has been on short term patterns, which appear bullish. The break through various resistance lines last week portends a move through 136.13 and possibly higher. Risk should be kept to 132.44 and 133.83-134.45 are potential supports on a drop below the short term trendline.
[B]
British Pound / Japanese Yen[/B]
A break below 146.74 would confirm a significant double top near 163.00. However, there is the possibility of a sizeable rally prior to a test and break of 146.74. The decline from 163.15 counts well as an impulse and price action since 149.00 (9/2 low) may be carving out an expanded flat (which seem to be common in Yen crosses). Trading above the resistance line shown would begin to suggest that this interpretation is correct. The target would then be above 153.31.
[B]
Swiss Franc / Japanese Yen[/B]
The CHFJPY is in the same position as the EURJPY. Is the multi month range a consolidation or reversal? Time will tell. Still, the pair has shown technical strength by breaking through short term trendlines so favor the upside against 87.16 (beware of potential triangle resistance near 89.75). In the event of weakness, 88.72 and 88.28 are areas to expect support.
[B]
Canadian Dollar / Japanese Yen[/B]
No change from Friday - “The recent break of trendline resistance in the CADJPY suggests it is better to be long than short in the near term. It is unclear what pattern is unfolding from above 90.00, but clarity will come with time. For now, respect the rally through trendline resistance. 84.27 is potential support but the top side of the former resistance line has held thus far.”
[B]
Australian Dollar / Japanese Yen[/B]
There are several patterns that could be unfolding in the AUDJPY; from head and shoulders tops, bottoms, triangles - the picture is mixed. Given the trendline break (which then held as support) and the technical considerations of other Yen pairs, it is best to look higher. Trading through 80 would expose 82. 78.8 may be short term support.
[B]
New Zealand Dollar / Japanese Yen[/B]
No change from Friday - “Having broken above a resistance line, the NZDJPY has sights set on 66.00. Short term support is concentrated at 64.00 and 63.00 is the key level.”
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (Monday), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of [I]Sentiment in the Forex Market.[/I] Follow his intraday market commentary at DailyFX Forex Stream.
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