A few crosses have broken out from multi month patterns (EURCAD, GBPJPY), others are close to breaking from multi month patterns (notably EURCHF), and still others are testing trendlines and/or show important reversal characteristics (Yen crosses, EURAUD).
[B]Euro / British Pound[/B]
The EURGBP continues higher in impulsive fashion and is approaching the initial target of .9269. A rally through there exposes the potential resistance line drawn off of the August highs and then .9507. As has been the case for weeks, “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).” The character of the rally from .8399 is not corrective so a new high (above .9807) seems probable. There will be retracements along the way, and I’ll attempt to identify them in real time. Support (former resistance) is.9087. Watch the lower parallel for support as well.
[B]Euro / Swiss Franc[/B]
“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 seems 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]Aggressive traders may jump the gun and go short against 1.5238 in anticipation of a downside break, which may eventually test/break the October 2008 low. [/B]
[B]Euro / Canadian Dollar[/B]
[B]
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The EURCAD has broken higher from its 9 month wedge pattern. The development is extremely bullish as wedges usually serve as interruptions in the larger trend. In other words, the target is above 1.7500. Look to buy on dips to support. The breakout level, 1.5913, is now support.
[B]Euro / Australian Dollar[/B]
The EURAUD shows signs of a bottom. Trendline resistance has been broken. 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 has continued on to yet lower prices as its trendline has continually failed. However, trendlines are meant to be broken. The number of recent tests of this line suggests that once broken, the rally could be exceptionally strong.
[B]Euro / Japanese Yen[/B]
Simple is usually better in technical analysis. Nowhere is the more apparent than with the EURJPY. For the past 6 + months, the pair has traded in a large sideways (slightly contracting) range. The pattern could be just a consolidation prior to additional gains or a significant distribution and therefore reversal. There is the specter of a head and shoulders top. Coming under the neckline (at 129.96 today and increases about 5 pips per day) would turn conditions decidedly bearish. The GBPJPY has already broken lower; perhaps the EURJPY will eventually play catch-up. [B]132.50 and 133.32 are resistance and those that want to short before a break (potentially added reward comes with additional risk) should keep risk to 135.50. [/B]
[B]British Pound / Japanese Yen[/B]
As touched on in the EURJPY commentary, the GBPJPY has already broken down. Now beneath the 200 day SMA, focus is on 139.17 (100% extension and an April pivot) and then 130.40-131.40 (161.8% extension and a March pivot). The line extended from the August and 9/23 highs can be used as a point of reference from which to short. Of course, one may not even get the chance to do so before 139.17 is reached. 145.50 and 146.30/75 are resistance levels prior to the line. 150.44 is risk for bears.
[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. A break below the neckline (lower line on the chart) would clear up the situation. Those willing to try the short side now should do so as close to resistance, 87.80 and 88.15, as possible. Risk should be kept to 89.50.
[B]Canadian Dollar / US Dollar[/B]
The CADJPY has broken beneath a support line. Rallies should be sold at resistance. 83.00, 83.50, and 84.00 are resistance levels and a bearish bias is warranted against 86.10. The range low, 78.50, is the next potential support.
[B]Australian Dollar / Japanese Yen [/B]
The AUDJPY is attempting a break of its own. The structure of the decline when viewed on intraday charts is promising for bears (drop from 80.08 is impulsive). 78.05 and 78.80 are resistance levels and a bearish bias is warranted against 80.10 in anticipation of a break below 76.40 (and much lower).
[B]New Zealand Dollar / Japanese Yen[/B]
A clear wave pattern can be seen in the structure of the NZDJPY rally since February. The advance is an A-B-C correction with wave C as a diagonal. A top can not be confirmed until price breaks below the lower diagonal line, but that should occur soon. That line is at 64.02 Monday. 64.74 and 65.25 are resistance levels and a bearish bias is warranted against 66.50.
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 Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
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