The EURGBP, EURAUD, and EURNZD appear to be forming bullish bases. Reward/risk is heavily skewed in favor of bulls.
Euro / British Pound
The EURGBP may have completed or be very close to completing a correction from the December 2008 top. The structure of the decline since then is not especially clear, which is the first sign that the pair in question is stuck in some sort of correction. If the interpretation of the wave count above is correct, then the EURGBP should retrace most of its decline. Today’s outside bullish day is a good start.
Euro / Swiss Franc
Expectations are for the EURCHF to exceed 1.5450 at minimum. Such a rally could complete wave C of a triangle that has been underway since the October low.
Euro / Canadian Dollar
I showed the long term EURCAD head and shoulders pattern last week. This week, I’ll focus on the short term pattern. The decline from 1.7522 can be counted a number of ways - either a series of first and second waves in a larger decline or an a-b-c correction that is complete. The structure of the rally from 1.5342 will indicate which count is more probable. As of now, the rally can be classified as corrective (3 waves). However, if wave iv and v develop, then the bearish 1-2 count is negated. There is potential resistance from Fibonacci at 1.6350.
Euro / Australian Dollar
It is possible that a multi decade top is in place for the EURAUD at 2.1174 (October 2008 high) but a strong advance, even if just countertrend could bring price back to 1.8660 (decline from there is choppy and could be a diagonal).
Euro / New Zealand Dollar
The decline from the February high is nearing and end as a 5th wave diagonal. Expectations are for a recovery back to 2.3600 (full retracement of the diagonal). Reversals from diagonals can be sharp.
[I]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.
Please send comments about this report to <[email protected]>[/I]