The EURJPY and CHFJPY are testing necklines from 7 month head and shoulder tops. These lines may just as well be bullish triangle lines though. In other words, these pairs are at critical junctures and we should have a better idea as to what the next big move will be within a few days.
[B]Euro / British Pound[/B]
Continue to favor the upside although it is possible that a small 4th wave is unfolding as a triangle right now. Parallel channel support is at .9112 tomorrow today and increases 21 pips per day. A potential target is .9466 (which is where the rally from .9076 would equal the .8453-.8843 advance). This is also close to former chart resistance at .9507.
[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]
There are several technical patterns evident on the EURCAD daily chart. We’ve been working with the wedge pattern (which is bullish) for several weeks. However, the pair failed to hold above the top the wedge following its breakout. Sometimes, it pays to fade a failed breakout attempt. Also, a head and shoulders top could be forming since January 2008. The neckline is at 1.5292 and increases 2 pips per day.
[B]Euro / Australian Dollar[/B]
“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 EURAUD continues to drift lower. 1.5920 is former support and intersects with a downward sloping support line on October 21st. 1.6665 is potential resistance and the trend is down against 1.6922.
[B]Euro / New Zealand Dollar[/B]
The EURNZD has also continued on its path lower. The lower support line is at 1.9549 tomorrow and decreases 22 pips per day.
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[B]Euro / Japanese Yen[/B]
We still await a resolution to the pattern that began in March, which could be a consolidation prior to additional gains or a significant distribution and reversal. There is the specter of a head and shoulders top. Price is just under the neckline now but the triangle count is valid above 127.01. Staying below 131.71 keeps the short term picture bearish. Trading above there would trigger a breakout from a short term inverse head and shoulders (visible on an hourly chart).
[B]British Pound / Japanese Yen[/B]
The GBPJPY tested its 9/28 low (139.71) today and held but only a push above 144.61 would indicate additional upside potential from a double bottom. Even if that were to happen, the GBPJPY would still face a trendline, which is at 146.48 today and 146.09 tomorrow.
[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 (tested today but held) would suggest that the next move is lower. 87.80 and 88.15 would be potential resistance levels on a push through 87.35.
[B]Canadian Dollar / Japanese Yen[/B]
The CADJPY has broken below a support line but the 200 day SMA has held. A bearish outcome remains possible below 86.07. Exceeding that level exposes the high. 84.72 is potential resistance. The underside of the former support line and short term channel resistance have held and the proximity of 86.07 males the reward/risk ratio favorable to bears.
[B]Australian Dollar / Japanese Yen[/B]
The AUDJPY spiked below 76.39 (range low) Friday but trades back at a former support line. A bearish outcome remains possible as long as price is below 80.08. Exceeding that level exposes the high at 82.05. The next level of chart support is not until 70.74. Similar to the CADJPY, the former support line is holding as resistance (as is a short term resistance line).
[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. Price broke below the lower diagonal line last week but a longer term support line has held so far. Still, the diagonal implications are bearish. Reversals following diagonals are usually sharp (but the diagonal may not be complete yet). Coming under 63.05 would warrant a bearish breakout strategy.
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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