The EURCHF is approaching the apex of its nearly year long triangle so beware of a break. The break from a large EURCAD downsloping wedge is bullish but a support line needs to hold in order for the upside to remain favored. Most Yen crosses remain in ranges but breaks look imminent.
[B]Euro / British Pound[/B]
A EURGBP pullback brought the pair back to former resistance, which has held as support. Expect a push through .9306 as long as channel support holds (which is at .8988 today and increases 13 pips per day).
[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]Euro / Canadian Dollar[/B]
After breaking higher from its 9 month wedge pattern, the EURCAD has declined quickly back into the wedge and is approaching a potential support line, which is at 1.5535 today and increases 8 pips per day. The break from the channel is bullish but price needs to hold above the support line. The long term target is above 1.7500.
[B]Euro / Australian Dollar[/B]
The EURAUD is testing a down sloping support line, which is also the top of a 2008 congestion zone. 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 bottom of the congestion zone intersects with the lower trendline on October 8.
[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. If the decline continues, then the pair could eventually reach trendline support, which is at 1.9728 this week and 1.9617 next week (decreases 111 pips per week).
[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, 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 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. That line is at 148.47 today and decreases 40 pips per day. Of course, one may not even get the chance to do so. I wrote Monday that “144.30-145.50 is a zone that may serve as resistance going forward.” The lower end of this zone has held so far, with the high today at 144.61. The breakdown point of 146.74 is potential resistance and intersects with the down sloping trendline on October 6 (this is close to the 200 day SMA, which is in red).
[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. 87.80 would be resistance on a push through 87.35.
[B]Canadian Dollar / Japanese Yen[/B]
The CADJPY broke beneath a support line but immediately reversed from the 200 day SMA. Still, a bearish outcome is possible if price remains below channel resistance. Trading through there opens up the door for a move towards the high (90.41).
[B]Australian Dollar / Japanese Yen[/B]
After breaking lower and nearly testing 76.40, the AUDJPY has reversed violently and now trades just below the top of its recent range. Conditions clearly remain favorable for range traders but a rally through 80.08 would expose the 2009 high of 82.05.
[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 (price did trade below that line but failed to remain below). Upside potential remains until the lower diagonal line ‘gives’.
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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