The EURCHF and EURCAD are nearing breakout territory (the former from a triangle and the latter from a head and shoulders top). The Yen is weak and patterns suggest that this trend likely continues.
[B]Euro / British Pound[/B]
Continue to favor the upside. Bulls are in solid control above .9160. .9212 and .9244 are short term support levels. 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.” That break will probably occur soon. Volatility (as measured by a 21 day ATR) is the lowest since June 4, 2007. On June 6th, a 250 pip advance began that took less than 2 weeks. You can see by looking at the chart that the EURCHF experienced wild swings from then on as volatility picked up. 1.5225-1.5077 is the ‘breakout zone’.
[B]
Euro / Canadian Dollar[/B]
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. Now, however, a head and shoulders top appears could be forming since January 2008. The pair rests just above the neckline now. Clearly, short term momentum is down, which favors a break. Bears are in control against 1.5655 and resistance levels are 1.5390 and 1.5500.
[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 lower and there is little likelihood of any support until 1.6040. 1.5920 is former support as well and intersects with a downward sloping line on October 21st. Resistance levels are 1.6450 and 1.6510 and the trend is down against 1.6907.
[B]
Euro / New Zealand Dollar[/B]
The EURNZD has also continued on its path lower. The lower support line is at 1.9504 Monday and decreases 22 pips per day. 2.0100 and 2.0287 are potential resistance levels. Trading above the steep downward sloping resistance line would begin to suggest reversal.
[B]
Euro / Japanese Yen[/B]
I wrote Wednesday that “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).” The pattern is clear and the break higher projects a move to 134.30. Support is at 131.70 and 131.10. Price should stay above 130.80.
[B]
British Pound / Japanese Yen[/B]
There is potential for a GBPJPY double bottom. Trading through 144.60 would project a move through the 2 month resistance line and towards the 149.00-150.00 area. There is potential short term support at 141.60. Favor the upside against 139.71.
[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. Having held the support line and turned up with conviction, the upside looks more probable at this point. Structurally, the entire advance from the December 2008 low may be a complex W-X-Y correction (wave X is a triangle). 86.50/70 is potential short term support.
[B]
Canadian Dollar / Japanese Yen[/B]
Having traded above 86.07, the CADJPY is likely to head higher. Price should remain above 83.11 and supports come in at 84.90 and 84.30.
[B]
Australian Dollar / Japanese Yen[/B]
The AUDJPY spiked below 76.39 (range low) last Friday but held and is on the verge of exceeding the 2009 high (82.05). Support should be strong at and just above 80 (breakout level).
[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. Reversals following diagonals are usually sharp (but the diagonal is probably not complete yet). A target is 69.10, which is the 100% extension of wave A.
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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