Euro Below 1.3531 Keeps Bears Firmly In Control

[B]- Euro 1.3475 Strong Resistance

  • Japanese Yen Nearing Support (USDJPY Resistance)
  • British Pound 1.9700 Support…For Now
  • Swiss Franc Continues to Weaken
  • Canadian Dollar Objective at 1.0733
  • Australian Dollar Objective at .8127
  • New Zealand Dollar Objective at .7161[/B]


EURUSD - No change from yesterday as price action is playing out as expected. "As long as price is below 1.3531, our working assumption is that either a 3rd wave or a C wave is headed lower. Short term measured objectives are at the 100% of 1.3680-1.3462/1.3609 at 1.3391 and the 161.8% extension at 1.3256. Longer term, there is the possibility that a multi-month top is in at 1.3680 and that the EURUSD is headed much lower (towards 1.2500). This week?s COT data favors the ‘larger top?. For more on positioning, see http://www.dailyfx.com/story/charting_center/futures_positioning_cot_report/Euro_Longs_at_New_Record_1179756178128.html


USDJPY - The USDJPY is approaching resistance from the 2/22 high at 121.63, the 2/12 high at 122.08, and the 1/29 high at 122.17. Daily RSI is overbought at above 70 - so we are weary of chasing this trend. In the short term, the USDJPY is in the 5th wave position of a 5 wave rally that began at 119.46. A push above 121.60 would complete the rally and lead to at least a correction, although it is out contention that a much more significant top will form. The COT data shows that JPY shorts are getting stretched as well. We are sitting tight for now but watching the USDJPY closely for any signs of a reversal.


GBPUSD - Cable has found support just below 1.9700 but the bounce has been minimal so far. Although the decline from the top (2.0131) is choppy, the series of lower highs keeps us looking lower. Trendline resistance (shown below) comes in at 1.9760 and 1.9880, but price needs to remain below 1.9873 (former peak) in order to keep the short term trend pointed lower. Daily lows from late March/early April are at 1.9545/89 (there is a trendline dating to June 2006 near there as well). At this point, the pattern from 2.0131 appears to be playing out as a double zigzag - which points to lower levels. Price has dropped under the 55 day SMA also (the 100 day is at 1.9661)


USDCHF - No change regarding the USDCHF as the bull trend remains intact. “The impulsive action from 1.2124 may be the beginning of a 3rd wave advance. Ultimately, we expect this rally to span weeks and target 1.2571. A diagonal from 1.1993 may have kicked off the party and a measured objective for the end of wave 3 is not until 1.2493. The pair is pushing against the 200 day SMA right now, which may offer some resistance. The 3/9 high at 1.2354 is the next hurdle on the chart. The bullish trend is strong as long as 1.2221 holds.”


USDCAD - The 5th of the 3rd wave from 1.1168 may need to consolidate and then make one more low before the anticipated wave 4 bounce occurs. The hourly chart shows that wave 3 (of 5 of 3) is extended and that a dip below 1.0825 would complete 5 down from 1.1061. We should expect some consolidation under 1.0965 before yet another low before larger wave 4 occurs in a period of consolidation/pullback towards 1.1168. A measured objective for the end of the decline is at the 161.8% extension of 1.1168-1.0965/1.1061 at 1.0733.


AUDUSD - We maintain that a C wave decline is underway towards the 100% extension of .8390-.8168/.8349 at .8127. Bears are in control as long as .8256 remains intact. .8127 would be where wave C would equal wave A (55 day SMA at .8149).


NZDUSD - Kiwi is in the same position as the AUDUSD. That is, a C wave lower appears to be unfolding from .7403. We are bearish against .7403 and looking for a decline to where wave C would equal wave A at .7161. Potential short term support may come in from the 55 day SMA at .7230. The most aggressive count has the Kiwi breaking below .7264 while .7316 remains intact.