Among the most interesting crosses right now is the EURCAD, which has broken higher from a 9 month wedge pattern. The pair is testing the breakout level as support.
[B]Euro / British Pound[/B]
After exceeding the 61.8% of the decline from .9807, the EURGBP may be in need of a pullback/sideways consolidation prior to a run at the December 2008 high. Former resistance at .9087 is likely support.
[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]
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. I wrote Friday that traders should “look to buy on dips to support. The breakout level, 1.5913, is now support.” The pair has come back to the breakout level and support is reinforced by a ST support line. Favor the upside against 1.5617.
[B]Euro / Australian Dollar[/B]
EURAUD rallies continue to fail. As mentioned in recent weeks, daily momentum studies are divergent with price lows. This warns of a low, but until a bullish price pattern emerges, going long is dangerous. The next level of potential support would be 1.6600.
[B]Euro / New Zealand Dollar[/B]
EURNZD has continued on to lower prices as trendline tests have 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. Levels that could be support are 2.0200 and 1.9885.
[B]Euro / Japanese Yen[/B]
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 (tested today, but support has held) would turn conditions bearish. It is possible that the EURJPY has formed a triangle since the end of April. Trading above 135.52 would favor this interpretation.
[B]British Pound / Japanese Yen[/B]
The GBPJPY has nearly reached its initial objective of 139.17 (100% extension and an April pivot). The next target area is 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. 144.30-145.50 is a zone that may serve as resistance going forward.
[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 (on the chart) would suggest that the next move is lower. 87.15 and 87.80 are potential resistance levels.
[B]Canadian Dollar / Japanese Yen[/B]
The CADJPY has broken beneath a support line. Rallies should be sold at resistance. 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]
After breaking lower and nearly testing 76.40, the AUDJPY has reversed violently and now trades back at the multi-month support line. A cautious bearish bias is warranted against 80.08 but conditions clearly remain favorable for range traders (as evidenced by the strong demand at the bottom of the recent range). 78.80 is potential resistance.
[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 however. That line is at 64.02 today. Price action was promising earlier but the sharp reversal at least delays the extended decline. 64.74 and 65.25 are resistance levels and the bearish interpretation is valid 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 [I]Sentiment in the Forex Market[/I]. Follow his intraday market commentary at DailyFX Forex Stream.
Contact Jamie at <[email protected]> if you would like to receive his reports via email.