Referring to Technical Strategist Jamie Saettele’s previous analysis, we don’t believe the picture has changed and that the EURGBP is nearing the end of a 5 wave rally that began back in January 2007. When wave 3 is extended (as it clearly is here), waves 1 and 5 tend towards equality. In this case, wave 5 (from .7391) would equal wave 1 (.6535-.6867) at .7723, however, the pair blew by .7723 and shot up to .7910. The next measured objective is where wave 5 is equal to 61.8% of waves 1 through 3. That level is at .8057. It does appear that additional gains are needed in order to complete 5 waves from.7391. Support remains strong in the Fibonacci support zone of .7791 / .7717.
Referring to Technical Strategist Jamie Saettele’s previous analysis, we don’t believe the picture has changed and that the EURGBP is nearing the end of a 5 wave rally that began back in January 2007. When wave 3 is extended (as it clearly is here), waves 1 and 5 tend towards equality. In this case, wave 5 (from .7391) would equal wave 1 (.6535-.6867) at .7723, however, the pair blew by .7723 and shot up to .7910. The next measured objective is where wave 5 is equal to 61.8% of waves 1 through 3. That level is at .8057. It does appear that additional gains are needed in order to complete 5 waves from.7391. Support remains strong in the Fibonacci support zone of .7791 / .7717.
Since the decline of EURCHF stabilized above the 76.4% fib of 1.5041 – 1.6825 at 1.5466, the pair has since recovered quite a bit. Daily oscillators are starting to bullish, and if price can push above the 61.8% fib of the noted rally at 1.5727, EURCHF will likely target a cluster of Fibonacci resistance at 1.5903/35. On the other hand, a failure to break above near-term resistance will likely find the pair pulling back toward 1.5600.
Jamie’s initial objective of 1.5906 for EURCAD has been met this past week and resistance found in the form of a minor 138.2% fib extension of the 1.3287-1.5198 (11/07 to 1/16) advance has set up a technical barrier to further advances. On the other hand, momentum is still firmly with bulls; so any pullbacks from 1.5900/25 will be seen as corrections in the larger trend until 1.5200 falls. A medium-term objective is for further upside potential and a test of the 150% and 161.8% extensions of the aforementioned wave at 1.6148 and 1.6373 respectively.
The pullback in EURAUD last week was short lived. What’s more, this short-term reversal has produced an asymmetrical triangle that is supported by the bullish momentum established in the steady uptrend since the beginning of the month. As such, any moves to the downside will likely be moderate and our ultimate objective will remain to the upside, which further holds to Jamie’s analysis that we are working through a larger 3 wave. A break of above 1.7255 would see the next target at the 12/10/04 swing high at 1.7685. Support through the medium term is seen at the 38.2% retracement of the 2/19 to 3/17 uptrend at 1.6742.
EURNZD is building up to a breakout from a technical formation within a technical formation. The immediate barrier for the pair is a range that has developed between 1.8190/215 to 1.9860/75. Spot has reversed after testing the top of this range, but the bullish push has not yet broken. The near-term target is the range top, but a break out of this congestion formation would then look for the larger technical formation – a descending wedge that has developed through the life of the euro and now falls around 2.0480. To call an end to this uptrend, we would need to see a reversal past the 50% retracement of the 1.8193-1.9859 (2/26 to 3/17) rally at 1.9026.
Written by Terri Belkas and John Kicklighter, Currency Analysts for DailyFX.com
Send Terri or John questions or comments about this article at <[email protected]> or <[email protected]>.