The EURUSD reversal from the top of a short term channel is confirmed by a drop below an even shorter term trendline. Wave structure suggests that this US dollar advance (EURUSD decline) is in its early stages (multi-month and probably year + rally).
[B]Euro / US Dollar[/B]
I wrote yesterday that “the reversal yesterday is all the more important when considering the channel line. Use the support line (extended from 9/4 and 9/21 lows…in red on the chart) as a pivot. In other words, a drop below would indicate an opportunity to short.” The EURUSD did drop below and focus is now on the lower end of the short term channel (green)/trendline support (black). 1.4410/50 is the level at which a bounce has a high probability of materializing. Rallies should be sold. Although not especially clear, a push above 1.4725 could complete a corrective advance.
[B]British Pound / US Dollar[/B]
Having broken neckline support, the next levels of interest in the GBPUSD are 1.5800 and 1.5728. Former resistance is now potential support in the 1.6110/30 zone. The underside of the neckline is also resistance going forward.
[B]Australian Dollar / US Dollar[/B]
It is worth noting that the rally from .6245 is now exactly double the size (in price) as the .6005-.7275 advance. A and C waves sometimes relate to each other by factors of .618, 1, 1.618 or 2. Short term channel support has been broken (ideally we get a daily close below there today). Target former resistance levels of .8484 and .8270.
[B]New Zealand Dollar / US Dollar[/B]
The NZDUSD is similar to the EURUSD. The reversal occurred at a channel confluence of sorts. The topline of a channel since July and the midline of a channel since March rejected the advance. A short term support line is holding now but is expected to ‘give’ sooner than later. The drop below will expose the channel’s lower boundaries as well as former resistance at .6900.
[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 a retracement that exceeded former support, the USDJPY has made a new low. A trendline is redrawn (in dark…see the former line in a lighter shade), which is now potential resistance. Remaining beneath 92.55 keeps the trend pointed down with a focus on 87.10 (AND BELOW).
[B]US Dollar / Canadian Dollar[/B]
Having held the 61.8% retracement of the rally from .9055 and broken above channel resistance, focus is now on USDCAD 1.1130. Yesterday, I wrote of “the term pattern, which could be an inverse head and shoulders in the making” mentioning that “trade above the neckline, near 1.0800, would present an opportunity to target 1.1100.” 1.0860 is potential short term support.
[B]US Dollar / Swiss Franc[/B]
The USDCHF doesn’t have the reversal characteristics of the other USD pairs (EURUSD and NZDUSD reversing from channels, AUDUSD breaking channel support, GBPUSD large h&s, USDCAD short term h&s) but the wave count warns (and has been warning) of a significant low. Trading through the top of channel resistance would be confirmation of a low but a short term trendline has been broken, which is evidence enough for me to take action.
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.
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