Japanese Yen Continues Assault - Nearing an End?

• Euro Topped?
• Japanese Yen Targets High (USDJPY Low)
• British Pound Targets Fibo
• Swiss Franc Reversal at 61.8%
• Canadian Dollar Nearing Important Support
• Australian Dollar Decline Picks Up
• New Zealand Dollar Tanks

EURUSD – It remains our contention that price is in the process of topping or has already topped at 1.3262. The range has tightened the last two days, which increases the odds of a break. The breakdown point is 1.3182. We are treating the rally from 1.3182 as a small degree 2nd wave within a larger 5 wave decline. The decline from 1.3262 to 1.3182 is in 5 waves which improves the odds that a top is in place at 1.3262. Look for a test of the 1.3100 figure (1.618 extension of 1.3262-1.3182 / 1.3244 is at 1.3114) relatively quickly IF price breaks below 1.3182. 1.3162 must hold in order to keep the bearish structure intact. The chart today shows price action since the December high at 1.3370. Price has stalled right at the 78.6% fibo of the 1.3370-1.2865 decline and the rally is in 3 waves (with the C wave unfolding in 5 itself).

USDJPY – The vicious decline from 121.66 looks like a C wave that completed the correction of strength from 122.21. Price has held near the previous 4th wave low at 117.98 (dipping below to 117.49 intraday yesterday). Additional support is at the 200 day SMA (117.36), the 61.8% of 114.42-122.21 at 117.41, and a potential trendline drawn off of the May 2006 and December 2006 lows. That line is at 116.69 today and increases about 2 pips per day. With the shelf of support just below current price, risk is now to the upside. A break above 119.00 warrants a bullish bias.

GBPUSD – The longer term wave structure suggests that a major top is in place at 1.9915. In fact, the rally from 1.8090 traced out an ending diagonal. Ending diagonals are often fully retraced. A decline below 1.9260 strongly suggests that a top is in place at 1.9915. However, near term, price seems poised to test at least the 61.8% of 1.9918-1.9402 at 1.9720 as the 1.9519-1.9655 rally was retraced in 3 waves to its own 61.8% retracement at 1.9569.

USDCHF – The USDCHF has not budged since yesterday - “the pair is currently in the C wave position of the A-B-C correction. Although the pair has bounced this morning at the 50% fibo of 1.1878-1.2575 at 1.2227, the intraday charts suggest that the decline has more to go. Watch the 61.8% fibo of 1.1878-1.2575 at 1.2145 for a bottom.” Price has rallied over 60 pips off of the low at 1.2144 but price needs to rally above the 2/20 low at 1.2312 to more confidently say that at least a near term low is in place. Still, downside risk is limited.

USDCAD – The push above 1.1713 negates the short term bearish structure so focus has shifted to the 61.8% of 1.1879-1.1564 at 1.1758. This level is also previous congestion, which increases the likelihood of selling interest. Remember that the longer term wave structure is bearish as price is has turned down in the “5th of the 5th” wave that should bring prices below 1.0927 in order to complete the long term downtrend. As such, recent strength should be viewed as a wave 2 that is retracing the initial wave 1 decline from 1.1879 to 1.1564. The monthly chart sports an outside reversal as well.

AUDUSD – As long as price remains above .7827, the potential exists for a wave 5 rally to above .7950 before a larger pullback. On the other hand, .7827 is the bearish pivot. Daily CCI has rolled over from above 100, which is often a reliable turn signal. In the very short term, there are 5 waves down from .7950 to .7840, so a bounce to fibo support at the 50% / 61.8% at .7895-.7907 would be considered a correction.

NZDUSD – Analysis is unchanged from yesterday – “Given the long term head and shoulders pattern along with the 78.6% fibo of .7470-.5927 at .7138, it is possible that Kiwi is near a major top. The best interpretation on the daily accounts for an extended wave 1 from .5927. As mentioned with the USDJPY, a correction following a 5 wave sequence where the 1st wave is extended tends to bottom near the bottom of the 2nd wave. Thus, expectations are for a decline to .6528 from near current price. The 78.6% fibo at .7138 is risk.” The pair looks entrenched in a 3rd wave in the short term that should carry to at least .6878. The high today at .7036 is resistance.