Dollar Rally Looks Impulsive for First Time In Months - Is This the Turn?

• Euro Pierces 1.3600
• Japanese Yen Breaking Trendline
• British Pound Touches 2.0100
• Swiss Franc Wave 2 Still Valid
• Canadian Dollar Correcting Back Towards 1.1400
• Australian Dollar Reverses In Front of .8400
• New Zealand Dollar Reverses Before .7500

EURUSD – The EURUSD continues to rally, hitting 1.3615 this morning. The next level of chart resistance is the 2004 high at 1.3666. There is no change in the call for a longer term top due to the 7 wave rally (which is a double zigzag?.two zigzags connected with an X wave – labeled W-X-Y) from 1.1638. Still, a break of 1.3666 would expose 1.3799, which is where wave W (1.1638-1.2979) would equal wave Y (beginning at 1.2458). Near term, a pullback to prior 4th wave support at 1.3524 looks likely. There is no sign that a top is yet in place but we will closely monitor the situation as this is a critical juncture.

USDJPY – We mentioned yesterday that “on the daily, CCI is crossing below 100, which often signals a reversal.” A head and shoulders top is also evident on the daily. Coming under 118.20 strengthens the bearish case as it would end the series of higher lows since 115.14. Resistance should be strong at intraday resistance of 118.89.

GBPUSD – Cable traded to a 26 year high today after briefly trading above 2.0100. 5 waves from 1.9589 may be complete, thus we are looking for a pullback with support residing in the previous congestion area of 1.9880/1.9938. Only a break below 1.9822 indicates additional bearish potential and suggests that a major top may be in place.

USDCHF – A 5 wave decline from 1.2187 suggests that at least a correction of strength back to the previous 4th wave near 1.2100 is due. A rally above 1.2281 would inspire confidence in the longer term wave count that calls for a turn to much higher levels. This longer term turn scenario remains valid as long as 1.1877 holds. 240 minute RSI is bullish as the indicator is rising from oversold.

USDCAD – The USDCAD decline has likely put in a short term low at 1.1276. The 161.8% extension of 1.1879-1.1568 / 1.1826 at 1.1315 projects a low near this area and 240 minute RSI is increasing from oversold and divergent readings. This consolidation (in wave 4) will likely be a flat or a triangle (as opposed to a sharper correction) because the 2nd wave correction was sharp. 1.1394 is initial resistance.

AUDUSD – The AUDUSD reversed course yesterday in front of .8400. Daily oscillators (CCI and RSI) are overbought and divergent with recent highs. Also, the break that occurred at .8000 was from a triangle and triangle breakouts are terminal (meaning that they are eventually retraced). The daily chart below shows the triangle (a-b-c-d-e) and the 5 wave rally that has ensued and RSI. With daily oscillator action, an extreme risk reversal rate (1 month 25 delta options) and the Aussie at former longer term resistance, we are looking for a reversal. Coming under .8303 signals that we are on the right track.

NZDUSD – Kiwi reversed in front of .7500 last night. A Fibonacci turn date was Friday – but the longer term nature of the analysis allows for a deviation of 4 days. Daily RSI is overbought and divergent as well. Coming under .7374 would be the first sign that a top is in place. The decline from .7491 does look impulsive with small degree 4th and 5th waves to follow. 5 waves lower indicates that the larger trend is down. For this reason, we have shown the 15 minute chart today.