Pound Sterling Crosses Test Initial Support

  1. GBPJPY
  2. GBPCHF
  3. GBPAUD

GBPJPY – We focused last week on the fact that “the channel resistance line and the 1998 high give scope to a possible topping formation going forward. A decline below 234.89 would be the first sign of a larger downturn.” It appears that the pair is tracing out either a 3 wave correction or the beginning of a larger 5 wave decline. Initial measured support happens to be at 234.92 (where the decline from 240.11 would equal the 241.54-236.34 decline. This is very close to former resistance (now potential support) at the 1/3 high of 234.89. A decline much beyond there gives scope to and extended decline towards measured support at 231.71 (161.8% extension of 241.54-236.34/240.11 at 231.71. That level is reinforced by the 1/9 high at 231.93. Short term resistance is at 237.77. A bearish bias is warranted barring a rally above 240.11.

Key Levels & Technical Indicators

GBPCHF – We have recently focused on the possibility that the GBPCHF could be at a long term top due to long term wave structure (see last week). However, the pair could be turning up in the near term. Measured support held yesterday (the decline from 2.4671 to 2.4484 is equal to the 2.4671 to 2.4388 decline). The low yesterday was also at the confluence of the 38.2% of 2.3817-2.4764 / 20 day SMA at 2.4390. The 3 wave decline and shelf of support at yesterday’s low suggests a continuation of the uptrend. 2.4422 is key to this scenario. If the pair does rally, then monitor price action at the 61.8% of 2.4764-2.4385 at 2.4618 (this would be resistance).

Key Levels & Technical Indicators

GBPAUD – The GBPAUD has continued its rally and the pair is testing 6 year trendline resistance. It does appear that there are 5 waves up from 2.4576 so a retracement is favored from near current price. If 2.5482 holds as resistance, then initial support would be at the 38.2% of 2.4574-2.5483 at 2.5136. While we could see a retracement in the short term, a break of a 6 year trendline could lead to material gains. The next level of resistance would be the 12/16/2004 high at 2.5676.
Key Levels & Technical Indicators

Table
CCI(20) – 20 day Commodity Channel Index
> 0 – bullish
0 > – bearish
> 100 – extremely bullish
-100 > - extremely bearish

RSI(14) – 14 day Relative Strength Index
> 50 – bullish
50 > – bearish
> 70 – overbought
30 > - oversold

MACD ? - MACD slope (MACD – MACD[1])
> 0 – bullish
0 > - bearish

Mom(21) – 21 day Momentum
> 0 – bullish
0 > - bearish

ATR(14) – 14 day Average True Range (volatility)
Medium – 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low – 25th percentile* >
*measured against past 3 months

[B] Weekly Release Schedule

[/B]

More…