Euro 2 Month Channel Resistance Something to Watch

The top of a EURUSD channel has held as resistance so far as has the midline of channels for the AUDUSD and NZDUSD.

[B]Euro / US Dollar[/B]

1.4850, which is the 100% extension of the 1.2327- 1.4723 rally, has been one of the levels that we’ve been focusing on as a possible turning point. Not only did the high last night come within 10 pips of that level but the top of a 2+ month channel (green) provides resistance as well. A bar reversal pattern today from these levels would give us reason to try the short side. Stay tuned.

[B]British Pound / US Dollar[/B]

Focus remains on the larger head and shoulders pattern that has been unfolding since early June. The neckline held Monday and Cable has now rallied to trendline resistance. A larger bearish bias is valid against 1.6575 but confidence in a large downside move is low until a daily close below neckline support.

[B]Australian Dollar / US Dollar[/B]

“The AUDUSD continues to work higher towards the 78.6% of the decline from .9856-.6007, which is .9032. This level intersects with a potential resistance line on September 25.” That would be Friday. Resistance has entered the picture from a short term channel midline. .8680 is potential short term support. Coming under .8586 would turn conditions bearish.

[B]New Zealand Dollar / US Dollar[/B]

Kiwi has gone vertical in what may be a blow-off top. I wrote yesterday that “the pair is at its highest level since August 2008 and levels to keep an eye on are .7250 (Fibonacci extension which is discussed in FX Technical Weekly), .7382 (January 2008 low) and .7444 (June 2008 low).” I neglected to mention a channel mid line, which has held as resistance thus far (near .7300). The NZDUSD is in the same boat as the EURUSD (waiting for proved weakness off of resistance).

[B]US Dollar / Japanese Yen[/B]

Keep the long term outlook in perspective - “a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80).” After breaking above trendline resistance and trading to 92.50, the USDJPY retraced a significant portion of its recent rally and the top side of that former resistance line has held as support. Conditions are of the range variety for now.

[B]US Dollar / Canadian Dollar[/B]

Barring a break above the resistance line, the USDCAD is vulnerable to a drop towards 1.0330 - which has been both support and resistance over the last several years. This level is also the 61.8% extension of the 1.3068-1.0782 decline (from 1.1730). Thus far, the 61.8% retracement of the rally from .9055 has held. The circled area could be a triangle, in which event the immediate move is higher towards 1.1100.

[B]US Dollar / Swiss Franc[/B]


“The print below 1.0367 (December 2008 low) satisfies the minimum requirement for wave v of C. Divergence with momentum on nearly all time frames warns of a sharp turn against the Franc.” It would take a rally through 1.0526/channel resistance in order to proclaim with confidence that a low is in place. Until then, focus is on 1.0037.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday mornings), 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.

Contact Jamie at <[email protected]> if you would like to receive his reports via email.