Dollar Range Tightens; Breakout Risk Increasing

The US dollar remains confined to a range. Since 6/3, the EURUSD has ranged between 1.4337-1.3748 and the pair is in the center of that range now. Confidence in direction is low although the topping scenario (USD bottoming scenario) remains valid as long as the EURUSD is below 1.4140.

Euro / US Dollar

Staying below 1.4141 keeps the trend pointed down. The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves. Under this scenario, the decline from 1.4141 is a third of a third (powerful) wave decline. Trading above 1.4141 would trigger the alternate bullish count, in which the decline from above 1.4300 is an A-B-C correction that will be fully retraced.

British Pound / US Dollar

To review, this is what I am working with; “the rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated.” Since 1.6626, the GBPUSD has traded in a violent 400 + pips range. Until this range (1.6186-1.6626) breaks, there is little confidence in direction.

Australian Dollar / US Dollar

The AUDUSD count shown above is similar to the GBPUSD in that wave v of C may be truncated. The rally from .7823 is in 5 waves but failed to exceed .8269. Usually, this would signal that an entirely new bull cycle is underway. But given the extension of the rallies from .6245 and .6986, this scenario is not probable (that does not mean it is not possible however).

New Zealand Dollar / US Dollar

My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal, which is common. The NZDUSD unexpectedly exceeded .6474 Friday, thereby negating the short term bearish structure. The bearish implications from the aforementioned evidence remain however.

US Dollar / Japanese Yen

The triangle continues to play out but there is an alternate bearish count in which the drop from 101.50 is a series of 1st and 2nd waves. 93.50 defines the trend (above is bullish and below is bearish).

US Dollar / Canadian Dollar

Near term, a head and shoulders top could be forming. There is potential Fibonacci resistance at 1.1566 (61.8% of 1.1643-1.1443).

US Dollar / Swiss Franc

As expected, the USDCHF has dropped into the Fibonacci retracement zone of the advance from 1.0631. The zone extends to 1.0782. If the decline from 1.1026 extends into an impulse (5 waves), then the rally from 1.0589 would be considered an A-B-C corrective rally rather than the beginning of a new bull.


Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.

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