Yen and Kiwi Triangles Could Lead to Terminal Thrusts Higher

  • Euro 5 Waves Up?Again
  • Japanese Yen Breaking Out From Triangle
  • British Pound Decline May Have More To Go
  • Swiss Franc Pierces 1.2000
  • Canadian Dollar Correcting Big Gains
  • Australian Dollar Retesting Trendline?as Resistance
  • New Zealand Dollar Triangle

EURUSD - The rally that has unfolded from 1.3541 is in 5 waves. The question is whether or not this 5 wave rally is the end or beginning of a bull trend. Big picture, we still think that the EURUSD is much closer to a top than bottom given overbought RSI on the daily and the 7 wave structure of the rally from 1.1638 (which is corrective). If 1.3666 gives way, which seems likely since the EURUSD is but a few pips from there, then Fibonacci extensions are at 1.3745 and 1.3823. Initial support is at 1.3621. There is no sign of a reversal until we see impulsive downside action.

USDJPY - The triangle that has formed since the 4/23 low at 118.22 clears up the picture a bit. Since the trend just before the triangle was up (117.60-119.03), we are looking for a thrust higher from the triangle. The very top of the triangle is at 119.03 and rallying through there satisfies minimum expectations although resistance lies at the 78.6% of 119.84-117.60 at 119.36. A thrust higher from the triangle and reversal is a possibility if price remains below 119.84. The near term bullish structure is intact as long as the USDJPY holds above 118.22.

GBPUSD - The decline from 2.0131 to 1.9955 is clearly corrective (3 waves) but the rally from 1.9955 is not impulsive either. As such, Cable may be tracing out a larger corrective pattern such as a zigzag pattern or a triangle. If a zigzag is playing out, look for support near the channel line just above 1.9850. Only a break above 2.0131 suggests additional bullish potential. 2.0068 is short term resistance.

USDCHF - The USDCHF came under 1.2000 which destroyed the bullish structure. The intraday price action is choppy and we have little confidence the wave structure at this point. In viewing the daily, there is still potential for a large inverse head and shoulders pattern to play out as long as price remains above 1.1877. Rallying above 1.2281 would increase confidence there. The USDCHF is at support from monthly pivot level S1. If broken, 1.1877 is exposed.

USDCAD - The USDCAD appears to have stabilized after piercing 1.1200 yesterday. There is little doubt that the decline from 1.1825 is a 3rd wave. Therefore, any rally should be treated like a correction as a 5th wave decline will eventually take the USDCAD to lower levels. Initial resistance is the 4/19 high at 1.1309. The next support level is the 10/30/2006 low at 1.1176. Yesterday’s candle was a doji as well, which favors a rally attempt.

AUDUSD - After breaking below 2 month trendline support, the AUDUSD has staged a big comeback and is nearly back to the trendline from which is broke down, which could now act as resistance. As with other pairs, the decline from the top was only in 3 waves, which leaves open the possibility of a new high above .8390. Monthly R2 is at .8410 and may be resistance.

NZDUSD - It looks like Kiwi is tracing out a triangle. The triangle is close to complete. Expect a small decline in wave E of the triangle before NZDUSD thrusts higher and makes a new high above .7491. Since triangles lead to terminal thrusts, we would be looking for a reversal following the new high. Declining below .7362 negates the triangle scenario. Near term support is between .7919 and .7439.