EURUSD – As mentioned yesterday “the break above 1.3066 strongly suggests that 1.2876 marked the end of a bearish wave 1 at 1.2865.”However, the rally is likely nearing its terminus.Strong resistance lies ahead at a potential resisting trendline drawn off of the 12/5 and 1/2 highs.Fibonacci resistance is at the 61.8% of 1.3370-1.2865 at 1.3177.The next move down will be a wave 3 and likely powerful.The triangle in the B wave position within the A-B-C correction from 1.2865 favors the bearish bias.Triangles occur in B waves but not in 2nd waves.Thus, we are confident that yesterday’s rally was a C wave and not a 3rd wave. Only a break below 1.2865 confirms that wave 3 down is underway.Regardless, the EURUSD is much closer to a significant top than bottom.
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USDJPY – We wrote yesterday,“In the event of a decline, look for initial support at the 38.2% of 119.96-121.66 at 121.01.This is also the 4th wave of one lesser degree (2/8 low)…a decline below 119.97 would possibly complete a 3 wave correction from 122.21 (wave A would equal wave C at 119.86).The USDJPY has satisfied minimum expectations and possibly completed the 3 wave correction from 122.21 at 119.78 today so a bottom is likely forming.A decline below exposes the next support level, which is the 38.2% of 114.42-122.21 at 119.24.
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GBPUSD – The GBPUSD rally reversed at the resisting trendline drawn off of the 1/23 and the 2/8 highs at 1.9680.We are also looking for a long term top in the GBPUSD (like EURUSD) but the structure is not as clear.On the daily, an inverse head and shoulders pattern gives scope to another thrust higher.Key resistance going forward is the 61.8% of 1.9918-1.9401 at 1.9720 and the 78.6% at 1.9807.The 3 wave correction from 1.9918 favors another push higher as well – the 61.8% of 1.9401-1.9680 is support at 1.9508.1.9401 needs to hold in order to keep the short term bullish structure intact.
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USDCHF – The USDCHF is testing critical support at 1.2375.An A-B-C correction from 1.2575 may have ended at 1.2353.The A wave (1.2575-1.2380) is equal to the C wave (1.2555-1.2353). Resistance is at the 61.8% of 1.2555-1.2353 at 1.2478.The 3 wave decline favors at least a near term bottom.A decline below 1.2353 shifts focus to the 38.2% of the 5 wave 1.1878-1.2575 rally at 1.2310.
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USDCAD – Friday’s turn lower likely marks the resumption of the long term downtrend.Long term focus is to below 1.0927.Since there are 5 waves down from 1.1879 (ending at 1.1628 this morning), so now is not the time to get short term bearish.A bounce to Fibonacci support could see the 38.2% at 1.1723 or the 50% at 1.1754 (which is also the 4th wave of one lesser degree).
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AUDUSD – The AUSDUSD rally looks extended.The pair has stalled near the 61.8% of .7941-.7697 at .7847 and hourly oscillators exhibit bearish divergence.The rally from .7697 to now could be the end of a 3 wave correction, although the c wave is a bit longer than the a wave.At least a corrective setback is due.Short term Fibonacci support is at the 38.2% of .7707-.7862 at .7803 and the 61.8% at .7766.A level to watch is the confluence of the 78.6% of .7941-.7697 / trendline drawn off of the 1/3 and 1/23 highs at .7888.
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NZDUSD – Kiwi is similar to AUDUSD but is closer to the equivalent trendline.The trendline drawn off of the 1/25 highs intersects with the 78.6% of .7038-.6769 at .6980 today and tomorrow.This level is likely strong resistance and a setback is viewed as probable.Initial support is at the low from today at .6919.A burst through .6980would be impressive and give scope to the 1/25 high at .7037.
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EURUSD – The break above 1.3066 strongly suggests that 1.2876 marked the end of a bearish wave at 1.2865.The decline from 1.3367 is either an A wave or a truncated 1st wave (truncated because the 5th wave did not drop below wave 3).In either case, a countertrend rally to fibo resistance is likely the next significant move.The 61.8% of 1.3367-1.2865 at 1.3177 bears watching as does the 78.6% at 1.3261.In the short term, there are a distinct 5 waves up from 1.2941 to 1.3105, so look for a setback towards the 38.2% at 1.3042 (which also is aligned with former resistance, which should now be support).http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-14-07techs2.gif
USDJPY – We have recently focused on the 5 waves up from 119.96 and mentioned that a corrective decline is probable.“In the event of a decline, look for initial support at the 38.2% of 119.96-121.66 at 121.01.This is also the 4th wave of one lesser degree (2/8 low).”Price slipped just below 121.01 this morning, bottoming at 120.86 before rallying up towards 121.10.There may be more room to the downside though.A decline below 119.97 would possible complete a 3 wave correction from 122.21 (wave A would equal wave C at 119.86).Price has slipped below the 20 day SMA as well.
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GBPUSD – We wrote yesterday that “an a-b-c correction from 1.9915 may be nearing an end as there are 5 waves down in the C position (from 1.9750).The 78.6% of 1.9260-1.9915 defends the area where A (1.9915-1.9549) would equal C (from 1.9750) at 1.9380.”Cable has turned higher this morning, stalling at the 2/12 high of 1.9569.1.9402 must hold for the bullish case suggested by the end of a 3 wave correction at 1.9402 to remain intact.Fibonacci support begins at the 38.2% of 1.9402-1.9568 at 1.9505.Resistance above 1.9569 is the 2/9 high at 1.9605, which is followed by a potential resistance trendline drawn off of the 1/23 and 2/8 highs at 1.9668.
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USDCHF – The USDCHF has held 1.2375 (the equivalent level in the EURUSD was 1.3066).A final 5th wave that would complete a 5 wave sequence from 1.1878 is still possible since price remains above 1.2375.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.Only a decline below 1.2375 negates the bullish wave implications.Focus would then shift to Fibonacci support of the 1.1878-1.2575 rally, beginning at the 38.2% at 1.2313.
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USDCAD – Friday’s turn lower likely marks the resumption of the long term downtrend.Long term focus is to below 1.0927.Since there are 5 waves down from 1.1879 (ending at 1.1659 this morning), now is not the time to get short term bearish.A bounce to Fibonacci support could see the 38.2% at 1.1743 or the 50% at 1.1769 (which is also the 4th wave of one lesser degree).A decline below 1.1645 warrants a breakout strategy.
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AUDUSD – The AUDUSD has rallied to and slightly exceeded the 2/9 high at .7827.The breech of .7827 gives scope to additional gains in the medium term.In the short term (next day or so), look for a corrective setback since there are a clear 5 waves up from .7707 to .7833.The 38.2% at .7785 is initial support.Also supporting the bull case is the rally above the 20 day SMA.
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NZDUSD – We have concentrated recently on the fact that “Kiwi bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).”The rally to .6932 is impulsive and warrants a bullish bias.Price is currently correcting recent gains and support is nearby at the 38.2% of .6818-.6932 at .6889 and the 61.8% at .6862.
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EURUSD – There is little changed regarding the EURUSD as the range contracts.A contracting range indicates increased potential for a breakout.We are still looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.1.3066 has held as resistance so the bearish structure remains intact.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Remember that a decline below 1.2865 satisfies minimum expectations for a 5th wave down.Only a rally above 1.3066 (Friday’s) high suggests greater bullish potential.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-13-07techs2.gif
USDJPY – We have recently focused on the 5 waves up from 119.96 and mentioned that a corrective decline is probable.“In the event of a decline, look for initial support at the 38.2% of 119.96-121.66 at 121.01.This is also the 4th wave of one lesser degree (2/8 low).”Price has declined to the 38.2% of 119.97-121.66 in what is so far a 3 wave structure so be wary of a resumption of strength prior to 121.01.A push through 121.56 favors bulls.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-13-07techs3.gif
GBPUSD – An a-b-c correction from 1.9915 may be nearing an end as there are 5 waves down in the C position (from 1.9750).The 78.6% of 1.9260-1.9915 defends the area where A (1.9915-1.9549) would equal C (from 1.9750) at 1.9380.A decline much below 1.9380 suggests that a larger downtrend is underway.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-13-07techs4.gif
USDCHF – The USDCHF is in the exact same position as the euro but as the inverse.The pair has held the 1.2375 level after testing it 3 times since 1/23.The shelf of support has led to a rally in what may be the final 5th wave to complete a 5 wave sequence from 1.1878.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2427 is initial support and price above there warrants an aggressive bullish stance.Only a decline below 1.2375 negates the bullish wave implications.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-13-07techs5.gif
USDCAD – Friday’s turn lower likely marks the resumption of the long term downtrend.Long term focus is to below 1.0927.5 small waves down from 1.1879 to 1.1707gave way to a corrective bounce that fell shy just short of the 38.2% at 1.1772.A break below 1.1707 strongly indicates that another impulsive move down is underway.A rally above 1.1770 suggests that a correction is still unfolding.Resistance in this case would be at the 61.8% at 1.1813.
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AUDUSD – The AUDUSD bounced just prior to support at .7698, but wave structure continues to favor the downside.A break of .7698 would suggest the pair was in a 3rd wave down that could challenge the 161.8% extension of .7982-.7760 / .7941 at .7578..7801 needs to hold if the bearish structure is to remain intact.Keep in mind that the longer term triangle (2 years long) also favors the downside.For more on the AUDUSD, see http://www.dailyfx.com/story/charting_center/weekly_chart_analysis/Descending_from_the_Top_of_1171043401869.html
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NZDUSD – We have concentrated recently on the fact that “Kiwi bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).”A bullish outcome remains possible as long as .6769 holds.A rally through .6896 would warrant a bullish bias in Kiwi.
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EURUSD – We are still looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.1.3066 has held as resistance so the bearish structure remains intact.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Remember that a decline below 1.2865 satisfies minimum expectations for a 5th wave down.Only a rally above 1.3066 (Friday’s) high suggests greater bullish potential.
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USDJPY – The break above 121.38 brings 122.21 back in focus as the longer term implications from the break of the 8 year trendline are back at the forefront.A break above 122.21 exposes a measured objective at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.In the short term, it looks like there are 5 waves up from 119.96 so a corrective decline is probable.In the event of a decline, look for initial support at the 38.2% of 119.96-121.66 at 121.01.This is also the 4th wave of one lesser degree (2/8 low).
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GBPUSD – Our focus remains for a test of 1.9307, which is where the decline from 1.9750 would equal the 1.9915-1.9482 decline.The decline below last week’s low at 1.9482 bolsters the bearish case as does the break below a supporting trendline drawn off of the 10/16/2006, 11/17/2006, and 1/9 lows.A decline to 1.9307 would possible complete an a-b-c correction but an extension of weakness to below 1.9261 would suggest that a much deeper decline was underway.Near term, it is possible to count 5 waves down from 1.9732 so a countertrend rally could challenge fibo resistance, which begins at the 38.2% of 1.9732-1.9455 at 1.9561.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_021207_4.gif
USDCHF – The USDCHF is in the exact same position as the euro but as the inverse.The pair has held the 1.2375 level after testing it 3 times since 1/23.The shelf of support has led to a rally in what may be the final 5th wave to complete a 5 wave sequence from 1.1878.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2427 is initial support and price above there warrants an aggressive bullish stance.Only a decline below 1.2375 negates the bullish wave implications.Price back above the 20 day SMA favors bulls as well.
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USDCAD – Friday’s turn lower likely marks the resumption of the long term downtrend.Long term focus is no to below 1.0927.Price is below the 20 day SMA and the pair has broken below the 2/1 low at 1.1735.A decline below 1.1644 confirms that the bear is back. The bounce from 1.1713 is most likely a small degree 4th wave that will challenge the 38.2% of 1.1850-1.1713 at 1.1765 before completing its 5th wave to below 1.1713.
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AUDUSD – The a-b-c correction that we speculated was unfolding appears to have ended at .7827 and the decline below the top of wave a at .7773 confirms the bearish bias going forward.Support going forward is at the 1/31 low at .7698 of which a break exposes the 11/13/2006 low at .7614.Keep in mind that the longer term triangle (2 years long) also favors the downside.For more on the AUDUSD, see http://www.dailyfx.com/story/charting_center/weekly_chart_analysis/Descending_from_the_Top_of_1171043401869.html
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NZDUSD – We have concentrated recently on the fact that “Kiwi bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).”A bullish outcome remains possible as long as .6769 holds.A rally through .6896 would warrant a bullish bias in Kiwi.
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EURUSD – We are still looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.1.3066 did hold yesterday as resistance so the bearish structure remains intact.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Near term resistance is at the 38.2% of 1.3066-1.2912 at 1.2971 and the 61.8% at 1.3007.Remember that a decline below 1.2865 satisfies minimum expectations for a 5th wave down.Only a rally above 1.3066 (Friday’s) high suggests greater bullish potential.http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-09-07techs2.gif
USDJPY – The break above 121.38 brings 122.21 back in focus as the longer term implications from the break of the 8 year trendline are back at the forefront.A break above 122.21 exposes a measured objective at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.In the short term, it looks like there are 5 waves up from 119.96 so a corrective decline is probable.In the event of a decline, look for initial support at the 38.2% of 119.96-121.66.This is also the 4th wave of one lesser degree (2/8 low)
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GBPUSD – Our focus remains for a test of 1.9307, which is where the decline from 1.9750 would equal the 1.9915-1.9482 decline.The decline below last week’s low at 1.9482 bolsters the bearish case as does the break below a supporting trendline drawn off of the 10/16/2006, 11/17/2006, and 1/9 lows.A decline to 1.9307 would possible complete an a-b-c correction but an extension of weakness to below 1.9261 would suggest that a much deeper decline was underway.Near term resistance is yesterday’s low at 1.9543.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-09-07techs4.gif
USDCHF – The USDCHF has held the 1.2375 level after testing it 3 times since 1/23.The shelf of support has led to a rally in what may be the final 5th wave to complete a 5 wave sequence from 1.1878.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2427 is initial support and price above there warrants an aggressive bullish stance.Only a decline below 1.2375 negates the bullish wave implications.Price back above the 20 day SMA favors bulls as well.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-09-07techs5.gif
USDCAD – We wrote yesterday that “we have been calling for a major turn in the USDCAD to occur at or near the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.The pair reached 1.1873 on Friday and has turned down slightly.One more high, above 1.1873 would best serve the turn scenario.It looks like the USDCAD is unfolding in an ending diagonal from 1.1645.One more high would complete the 5 wave structure and potentially lead to a forceful decline.”We got that high yesterday as the pair hit 1.1879 and has since declined to below 1.1800.A decline below the 1/25 low at 1.1731 would bolster the bearish case and a decline below 1.1644 strongly favors a resumption of the long term downtrend.
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AUDUSD – We wrote yesterday that“the c wave has unfolded as an ending diagonal, an inherently weak pattern that often gives way to a forceful decline.”The a-b-c correction that we speculated was unfolding appears to have ended at .7827 and the decline below the top of wave a at .7773 confirms the bearish bias going forward.Support going forward is at the 1/31 low at .7698 of which a break exposes the 11/13/2006 low at .7614.Keep in mind that the longer term triangle (2 years long) also favors the downside.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-09-07techs7.gif
NZDUSD – We have concentrated recently on the fact that “Kiwi bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).”However, the inability of the pair to hold above former resistance (now potential support) at .6868 gives scope to more bearish price action.A bullish outcome is possible as long as .6769 holds but the probability is not as great as it was yesterday when the pair broke above .6868.A neutral stance is warranted until things clear up..6769 is the bearish pivot and .6896 the bullish pivot.
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EURUSD – We are still looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.See yesterday’s commentary for measured objectives and potential bottoming points for the EURUSD.The near term bearish structure remains intact as long as 1.3066 holds (and preferably 1.3029) as resistance.That said, the recent decline from 1.3029 may be the 3rd of the 5th wave that will eventually break below 1.2865.In fact, the 1.618% extension of 1.3066-1.2911 / 1.3029 is at 1.2779 – which is in line with our targets discussed yesterday.
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USDJPY –We have said that 121.38 is critical to the bearish case and the USDJPY is probing that level right now.A break above indicates that the zigzag correction we previously thought was playing out is no longer.122.21 is back in focus in this case as are the longer term implications from the break of the 8 year trendline.A break above 122.21 exposes a measured objective at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.Short term support is at 120.60.
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GBPUSD – Cable continues to fake out traders as the pair looked poised for a test of 1.9750 before turning down.We’ll revert to our previous working assumption that projected support is not until where the decline from 1.9740 equals the 1.9915-1.9482 decline at 1.9307.1.9740 must hold for the bearish structure to remain intact.
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USDCHF – The USDCHF has held the 1.2375 level after testing it 3 times since 1/23.The string shelf of support has led to a rally in what may be the final 5th wave to complete a 5 wave sequence from 1.1878.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2427 is initial support and price above there warrants an aggressive bullish stance.Only a decline below 1.2375 negates the bullish wave implications.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-08-07techs5.gif
USDCAD – We have been calling for a major turn in the USDCAD to occur at or near the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.The pair reached 1.1873 on Friday and has turned down slightly.One more high, above 1.1873 would best serve the turn scenario.It looks like the USDCAD is unfolding in an ending diagonal from 1.1645.One more high would complete the 5 wave structure and potentially lead to a forceful decline.Only a break below 1.1645 suggests that the long term downtrend has resumed.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-08-07techs6.gif
AUDUSD – The short term structure in AUSDUSD is rather bearish.An a-b-c correction appears to have taken place from the 1/31 low at .7698.The c wave would be equal to the a wave at .7791, which also happens to be the 38.2% of .7941-.7698.Also, the c wave has unfolded as an ending diagonal, an inherently weak pattern that often gives way to a forceful decline.A decline below .7743 confirms the bearish bias.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-08-07techs7.gif
NZDUSD – We have concentrated recently on the fact that “Kiwi bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).”However, the inability of the pair to hold above former resistance (now potential support) at .6868 gives scope to more bearish price action.A bullish outcome is possible as long as .6769 holds but the probability is not as great as it was yesterday when the pair broke above .6868.A neutral stance is warranted until things clear up..6769 is the bearish pivot and .6896 the bullish pivot.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-08-07techs8.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-08-07techs9.gif
EURUSD – We are still looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Only a rally above 1.3066 (Friday’s) high negates the near term bearish structure.Near term resistance is at the 61.8% of 1.3066-1.2912 at 1.3007.Remember that a decline below 1.2865 satisfies minimum expectations for a 5th wave down.The 200 day SMA is also potential support at 1.2824.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_2.gif
USDJPY – The USDJPY appears to be tracing out a 3 wave zigzag correction.The decline from 122.21 to 120.10 would be the first of that 3 wave correction (wave A) and the bounce to 121.38 would be the second wave (wave B).A third wave (wave C) decline could extend to 119.26, which is where waves A and C would be equal.119.26 is also the 38.2% of 114.43-122.21.Price closed below the 20 day SMA yesterday, which favors bears.121.38 is critical resistance to the bearish case and the measured objective at 119.26.Price is currently just below a short term resistance line (see chart below).
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_3.gif
GBPUSD – We were looking for a C wave decline to 1.9316 but the impulsive rally from 1.9537 negated that interpretation.Instead, the rally from 1.9537 is taking on the look of a wave C that will challenge the 100% extension of 1.9482-1.9750 / 1.9537 at 1.9805.We maintain that the GBPUSD is nearing a major top.In fact, that top could be in place at 1.9915.The decline from 1.9915 could be the first of a 5 wave bearish sequence and this bounce, which would end near 1.9805 would be the 2nd wave.Near term support is at 1.9620.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_4.gif
USDCHF – Due to the fact that we can count 5 waves up from 1.1880, it is possible that a countertrend move is already underway.The 5 wave rally from 1.1880 is likely the first wave of a larger 5 wave sequence thus the correction that is beginning now will be the second wave.Second waves often retrace a large portion of the first wave, so we are looking for a decline to extend towards the 61.8% of 1.1880-1.2575 at 1.2146.This level is also just above a series of lows from December and January.A decline below 1.2376 will be the first sign that this decline is underway.Price is very close to 1.2376 and the short term head and shoulders pattern suggests that a break is imminent.If 1.2575 is broken, then the bullish wave from 1.2376 is still progress.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_5.gif
USDCAD – We have been calling for a major turn in the USDCAD to occur at or near the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.The pair reached 1.1873 on Friday and has turned down slightly.While there is no evidence that a turn has occurred yet, a break below the 1/25 low at 1.1731 would strongly suggests that a top is in place.Very short term resistance is yesterday’s high at 1.1846 but 1.1873 needs to hold for the immediate bearish case to remain favored.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_6.gif
AUDUSD – The short term structure in AUSDUSD is rather bearish.An a-b-c correction appears to have taken place from the 1/31 low at .7698.The c wave would be equal to the a wave at .7791, which also happens to be the 38.2% of .7941-.7698.Also, the c wave has unfolded as an ending diagonal, an inherently weak pattern that often gives way to a forceful decline.A decline below .7743 confirms the bearish bias.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_7.gif
NZDUSD – Kiwi has bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).A rally above .6868 grants confidence to the bullish case.On the other hand, the pair may be forming a short term triangle.In this case, we would favor a terminal decline to below .6769..6868 needs to hold as resistance for the triangle to remain intact.(See yesterday’s chart for the former scenario..the chart below is the triangle interpretation).
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_8.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/techs_020707_9.gif
EURUSD – It looks like the 5th wave down (in a 5 wave bearish sequence that began at 1.3367) started at 1.3066.We are looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Only a rally above 1.3066 (Friday’s) high negates the near term bearish structure.Near term resistance is at the 38.2% of 1.3066-1.2912 at 1.2971 and the 61.8% at 1.3007.Remember that a decline below 1.2865 satisfies minimum expectations for a 5th wave down.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs2.gif
USDJPY – The USDJPY appears to be tracing out a 3 wave zigzag correction.The decline from 122.21 to 120.10 would be the first of that 3 wave correction (wave A) and the bounce to 121.38 would be the second wave (wave B).A third wave (wave C) decline could extend to 119.26, which is where waves A and C would be equal.119.26 is also the 38.2% of 114.43-122.21.Price closed below the 20 day SMA yesterday, which favors bears.121.38 is critical resistance to the bearish case and the measured objective at 119.26.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs3.gif
GBPUSD – Cable has been extremely volatile lately, trading in a 268 pips range the last 4 days but closing prices have been from 1.9605 to 1.9670.We were looking for a C wave decline to 1.9316 but this morning’s impulsive advance negates that interpretation.Instead, the rally from 1.9537 is taking on the look of a wave C that will challenge the 100% extension of 1.9482-1.9750 / 1.9537 at 1.9805.We maintain that the GBPUSD is nearing a major top.In fact, that top could be in place at 1.9915.The decline from 1.9915 could be the first of a 5 wave bearish sequence and this bounce, which would end near 1.9805 would be the 2nd wave.Near term support is at 1.9620.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs4.gif
USDCHF – Due to the fact that we can count 5 waves up from 1.1880, it is possible that a countertrend move is already underway.The 5 wave rally from 1.1880 is likely the first wave of a larger 5 wave sequence thus the correction that is beginning now will be the second wave.Second waves often retrace a large portion of the first wave, so we are looking for a decline to extend towards the 61.8% of 1.1880-1.2575 at 1.2146.This level is also just above a series of lows from December and January.A decline below 1.2376 will be the first sign that this decline is underway.1.2575 needs to hold as resistance.If 1.2575 is broken, then the wave from 1.2376 is still progress.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs5.gif
USDCAD – We have been calling for a major turn in the USDCAD to occur at or near the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.The pair reached 1.1873 on Friday and has turned down slightly.While there is no evidence that a turn has occurred yet, a break below the 1/25 low at 1.1731 would strongly suggests that a top is in place.Very short term resistance is today’s high at 1.1841 but 1.1873 is key to any bearish stance.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs6.gif
AUDUSD – The AUDUSD rally has stalled at its breakdown point at the 1/10 low of .7760.The near term structure is unclear so we’ll focus on the 2 year triangle.Our longer term bias is to the downside to complete a wave E in the long term triangle (A-B-C-D-E).Alternating legs of triangles are often related by a Fibonacci ratio of .618.61.8% of the C wave (.7991-.7014) is 604 pips and the top of wave E is .7982.Thus, we are looking for a decline to .7982 – 604 pips = .7378.Near term resistance is at the 61.8% of .7941-.7698 at .7848.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs7.gif
NZDUSD – Kiwi has bounced from where the .7038 decline equals the .7099-.6841 decline.As such, we are left with just a 3 wave correction of equal legs from .7099.This structure is suggestive of a bottoming in NZDUSD (as long as .6769 holds).A rally above .6868 grants confidence to the bullish case.Daily oscillators are bearish with CCI below -100.A cross above -100 would indicate a reversal opportunity.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs8.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-06-07techs9.gif
EURUSD – It looks like the 5th wave down (in a 5 wave bearish sequence that began at 1.3367) started at 1.3066.We are looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367.Measured objectives are centered near 1.2750.The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747.Only a rally above 1.3066 (Friday’s) high negates the near term bearish structure.A decline below 1.2865 satisfies minimum expectations for a 5th wave down.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs2.gif
USDJPY – The USDJPY may be tracing out a 3 wave zigzag correction.The decline from 122.21 to 120.10 would be the first of that 3 wave correction (wave A) and the bounce to 121.38 would be the second wave (wave B).A third wave (wave C) decline could extend to 119.26, which is where waves A and C would be equal.119.26 is also the 38.2% of 114.43-122.21.Price is slipping below the 20 day SMA today, which has held as support since early December.121.38 needs to hold in this case.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs3.gif
GBPUSD – Cable’s rally was rejected at the 61.8% fibo of 1.9915-1.9482 at 1.9750 on Friday and price has fallen nearly 200 pips since 1.9750.The decline from 1.9750 is the either a 3rd wave down or a C wave down.In either case, price expected to fall below 1.9482 before a concerted rally attempt takes place.A measured objective for the end of this 3rd (or C) wave is 1.9316, which is where the decline from 1.9750 would equal the 1.9915-1.9482 decline.Near term resistance is at the 2/2 low at 1.9636.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs4.gif
USDCHF – A wave 4 correction may have ended at 1.2377 on Friday.A break above 1.2575 would confirm that the decline to 1.2377 was indeed corrective and that a wave 5 was underway.Wave 5 (beginning at 1.2377) would equal wave 1 (1.1878-1.2274) at 1.2769 (very close to the 10/13/2006 high at 1.2773).Similar to the EURUSD (but the inverse), a rally above 1.2575 satisfies minimum expectations for wave 5.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs5.gif
USDCAD – The USDCAD finally pushed above the 1.1850 level on Friday.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.A rally much above 1.1883 gives scope to a test of the psychological 1.2000 level.A decline below 1.1737 would suggests that the pair has topped.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs6.gif
AUDUSD – The AUDUSD appears to be forming a short term triangle.There are 5 waves within the triangle, so a thrust lower should come soon.A decline below .7698 would indicate that the thrust lower had started and focus would then shift to the 11/13/2006 low at .7614.A rally above .7773 negates the triangle possibility.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs7.gif
NZDUSD – Kiwi bounced at .6778, which is where the decline from .7034 equaled the .7096-.6840 decline.If .6778 fails to hold, then projected support is at the 161.8% extension at .6619.Resistance is at today’s reaction high at .6868.Daily oscillators are bearish with CCI below -100.A cross above -100 would indicate a reversal opportunity.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs8.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-05-07techs9.gif
EURUSD – If the decline from 1.3367 is to trace out 5 waves, then the 5th wave down needs to start right now.The rally from 1.2876 to 1.3055 is 179 pips, which is nearly identical to the 1.2865-1.3055 rally (190 pips).The equal legs suggests that the rally from 1.2865 could be a 4th wave correction.The first indication that a 5th wave down was in progress would be a decline below 1.2982.Measured support on a break below 1.2865 is where wave 1 would equal wave 5 at 1.2739 (1.3055 – (1.3367-1.3051).1.3055 needs to hold for the bearish scenario to play out.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_3.gif
USDJPY – The USDJPY is turning up from the 50% fibo of 117.97-122.21 at 120.08.A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.We have a shorter term measured objective at 123.21, which is where the rally from 117.97 would equal the 114.42-119.67 rally.120.10 is support.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_4.gif
GBPUSD – Yesterday’s rally reversed just shy of the 61.8% of1.9915-1.9481 at 1.9751.Weakness from 1.9915 may b just the beginning of a much larger decline.Projected support is not until where the decline from 1.9740 equals the 1.9915-1.9482 decline at 1.9307.1.9740 must hold for the bearish structure to remain intact.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_5.gif
USDCHF – The USDCHF turned lower following the 5th wave rally to 1.2575.Expectations are for a 3 wave correction.A break below 1.2376 conforms that a short term top is in place.Fibonacci support begins at the 38.2% of 1.1880-1.2575 at 1.2309.Since this weakness is likely the beginning of a larger 2nd wave lower, expect a deeper retracement to challenge the 61.8% at 1.2146.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_6.gif
USDCAD – The USDCAD continues to trade sideways at the top of its yearly range.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_7.gif
AUDUSD – The initial rally off of the low at .7698 was retraced to .7715.A rally above .7773 would complete a 3 wave correction and give scope to additional weakness.Measured resistance is where the rally from .7715 would equal the .7698 to .7773 rally – at .7791.This is also where the 38.2% retracement of .7941-.7698 comes in.A decline below .7698 suggests that the next leg down is already in progress.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_8.gif
NZDUSD – Kiwi is nearing .6778, which is where the decline from .7034 would equal the .7096-.6840 decline.This measured objective intersects with the 11/29 and 11/30 lows.If projected support fails, then the decline may extend to the 161.8% extension at .6619.Former support (now resistance) at .6840 is key to the bearish case.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_9.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/tech020207_10.gif
Glossary of Terms
EURUSD – It looks as ifthe 5th of 1 wave down is indeed truncated (meaning that it failed to break below the wave 3 low).We mentioned yesterday that“The bullish evidence that indicates a potential turn higher is the 5 small waves from 1.2876 to 1.2982.Price has retraced in 3 waves from 1.2982 to 1.2925.”A rally above 1.3047 would confirm a turn higher and give scope to the 161.8% extension of 1.2876-1.2982/1.2925 at 1.3098.A short term bullish bias is warranted on a push above 1.3047 and barring a break below 1.2982.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs2.gif
USDJPY – Our analysis that “The rally above 121.78 makes it possible to count 5 waves up from 117.97 so the USDJPY may be close to a short term top” is confirmed and a decline below 120.19.The pair is just above this level.A decline below 120.19 exposes the 38.2% of the 114.42-122.21 5 wave advance at 119.24.Our long term focus remains higher (towards a measured objective just above 128) but the near term picture is bearish as price has declined below the support line drawn off of the 12/5/2006 and 1/5 lows.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs3.gif
GBPUSD – We had measured support at 1.9455/61 but price reversed prior to reaching our level yesterday (low at 1.9482).The decline from 1.9915 is just in 3 waves, so we need to favor the upside.A break above 1.9698 bolsters the short term bullish bias.If 1.9482 was the bottom of a correction from 1.9915, then Cable may be in a 3rd wave higher right now.If this wave count is correct, then a strong Cable rally is imminent.Measured resistance is not until where the rally from 1.9622 would equal the 1.9482-1.9672 rally; this is at 1.9812.An extended rally probes the 161.8% extension at 1.9929.1.9622 needs to hold in order to maintain confidence in the upside.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs4.gif
USDCHF – The USDCHF turned lower following the 5th wave rally to 1.2575.Expectations are for a 3 wave correction.A break below 1.2376 conforms that a short term top is in place.Fibonacci support begins at the 38.2% of 1.1880-1.2575 at 1.2309.Since this weakness is likely the beginning of a larger 2nd wave lower, expect a deeper retracement to challenge the 61.8% at 1.2146.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs5.gif
USDCAD – The USDCAD continues to trade sideways at the top of its yearly range.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.A decline below 1.1749 would confirm that the a 3rd wave (or C wave) down is in progress and that the USDCAD had already topped out.Measured support in this case would begin at where the decline from 1.1799 equals the 1.1847-1.1749 decline at 1.1700.The bearish structure is intact as long as 1.1799 holds as resistance.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs6.gif
AUDUSD – From yesterday “The AUDUSD has formed an ending diagonal since the 1/26 high at .7753.An ending diagonal is choppy and consists of overlapping waves. The structure often signals either the beginning or end of a move (in this case…the end).We have focused on the possibility that the decline from .7979 is simply a 3 wave correction.The decline from .7936 is the C wave of a an A-B-C correction from .7979.In this case, .7714 would be where the A and C waves would be equal.The pair did decline below .7714 this morning, but held at the 50% of .7414-.7979 at .7698.A rally above .7753 strongly argues that another leg up is in the works.”The rally above .7753 confirms the bullish structure and initial measured resistance is at .7811.An extended bull move targets the 161.8% extension of .7698-.7773/.7736 at .7858..7736 is key support.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs7.gif
NZDUSD – We were looking for a decline to challenge .6778, which is where the decline from .7034 would equal the .7096-.6840 decline.However, given the convincing bounce from .6811 (yesterday’s low), we are inclined to place the end of a 3 wave (a-b-c) correction at .6811..6811 needs to hold in order to keep this bullish structure intact.The short term wave structure is not as clear as AUDUSD (there are not a clear 5 waves up from .6811).Only a rally through .6918 strongly suggests that the path of least resistance is higher.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs8.gif
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/02/dailyfx_reports/dailytechs/02-01-07techs9.gif
EURUSD – Our working assumption has been that a 5th wave (of a larger wave 1) down in a 5 wave sequence from 1.3367 began at 1.3043.The longer term bearish scenario is best served by one more low below 1.2865, which would complete the 5th wave and give way to a 3 wave correction higher before the next leg lower.A rally above 1.3001 would suggest that the 5th of 1 wave down was truncated (meaning that it failed to break below the wave 3 low) and that the 3 wave correction (wave 2) has already started.In this case, fibo resistance begins at the 38.2% of 1.3367-1.2865 at 1.3055 and extends to the 61.8% at 1.3174.Still, our bias is to the downside for a break below 1.2865 and a test of the 161.8% extension of 1.3367-1.3051/1.3296 at 1.2787 UNLESS 1.3001 resistance is broken.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/01-30-07techs2.gif
USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.We have a shorter term measured objective at 123.21, which is where the rally from 117.97 would equal the 114.42-119.67 rally.However, the rally above 121.78 makes it possible to count 5 waves up from 117.97 so the USDJPY may be close to a short term top.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/01-30-07techs3.gif
GBPUSD – We maintain that weakness from 1.9915 is likely just the beginning of a much larger decline.Near term projected support is not until where the decline from 1.9736 equals the 1.9915-1.9645 decline.This is at 1.9461 (very close to the 1/9 high at 1.9455).In the EURUSD, price below 1.3001 keeps the near term bearish structure intact.The corresponding level in Cable is 1.9733 (if that is broken, then we’ll switch to an alternate wave count…which will be presented if price action requires).The 20 day SMA has held as support, with price bouncing off of the moving average on Friday and yesterday.A break below could be the trigger that bears are looking for.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/01-30-07techs4.gif
USDCHF – The USDCHF rally to above 1.2546 confirms that the decline to 1.2375 on 1/23 was the bottom of a corrective wave 4.The next bullish target remains the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2422 is initial support and price above there warrants a bullish stance.Since there are 5 waves up from 1.1878, we must be cognizant of the possibility that a 3 wave correction lower could take place at any time.A decline below 1.2422 would strongly signal that the larger correction has started.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/01-30-07techs5.gif
USDCAD – The USDCAD continues to trade sideways at the top of its yearly range.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/01-30-07techs6.gif
AUDUSD – The AUDUSD is little changed following the break below the neckline of the head and shoulders pattern.The 1/10 low at .7759 is the breakdown point and now resistance.Focus is now on the 11/13 low at .7614.There is still the possibility that this decline from .7936 is the C wave of a an A-B-C correction from .7979.In this case, .7714 would be where the A and C waves would be equal.A daily close above .7759 would give the latter scenario more weight.
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NZDUSD – The 7 month trendline remains the pivot in Kiwi.That line is at .6920 today and increases 7 pips per day.Nothing has changed regarding the short term wave structure.The rally from .6840 to .7034 was most likely an a-b-c correction of the .7096-.6840 decline.We are looking for a decline to challenge .6778, which is where the decline from .7034 would equal the .7096-.6840 decline.This measured objective intersects with the 11/29 and 11/30 lows.Price below .7034 keeps this analysis intact.
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EURUSD – The 5th wave of the 5 wave bearish sequence from 1.3367 is in progress and should take price below 1.2865.The 161.8% extension of 1.3367 – 1.3051 / 1.3296 is a bearish target at 1.2787.This potential support is reinforced by the 11/17 low at 1.2761 and the 200 day SMA at 1.2808.Another bearish target is the 61.8% extension of waves 1 through 3.This is at 1.2737.The minimum expectation is for price to dip to below 1.2865.Technically speaking, this would complete 5 down from 1.3367 and we would look for a 3 wave rally before the next leg down begins.On a very short term basis, 1.2948 should serve as resistance.A rally above there decreases confidence in the immediate bearish case.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.We have a shorter term measured objective at 123.21, which is where the rally from 117.97 would equal the 114.42-119.67 rally.However, the rally above 121.78 makes it possible to count 5 waves up from 117.97 so the USDJPY may be close to a short term top.The first sign that a top is in place would be a daily close below former resistance (now support) at 121.78.
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GBPUSD – On January 23rd, we wrote “be on the lookout for a reversal lower.5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us.”On that very day, Cable topped at 1.9915.Weakness from 1.9915 is likely just the beginning of a much larger decline.Near term projected support is not until where the decline from 1.9736 equals the 1.9915-1.9645 decline.This is at 1.9461 (very close to the 1/9 high at 1.9455).A daily close below 1.9455 confirms the larger bearish outlook.In the short term, price below 1.9644 keeps the bear comfortable.
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USDCHF – The USDCHF rally to above 1.2546 confirms that the decline to 1.2375 on 1/23 was the bottom of a corrective wave 4.The next bullish target remains the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2497 is initial support and price above there warrants an aggressive bullish stance.A dip below 1.2497 does not destroy the larger bullish structure but does merit a more cautious approach (technically…there are 5 waves up from 1.1878 but we think that this current 5th wave could extend to the mentioned measured objective of 1.2746).Only a decline below 1.2375 negates the bullish wave implications.
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USDCAD – The USDCAD continues to trade sideways at the top of its yearly range.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
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AUDUSD – The AUDUSD is little changed following the break below the neckline of the head and shoulders pattern.The 1/10 low at .7759 is the breakdown point and now resistance.Focus is now on the 11/13 low at .7614.There is still the possibility that this decline from .7936 is the C wave of a an A-B-C correction from .7979.In this case, .7714 would be where the A and C waves would be equal.A daily close above .7759 would give the latter scenario more weight.
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NZDUSD – The 7 month trendline remains the pivot in Kiwi.That line is at .6913 today and increases 7 pips per day.Nothing has changed regarding the short term wave structure.The rally from .6840 to .7034 was most likely an a-b-c correction of the .7096-.6840 decline.We are looking for a decline to challenge .6778, which is where the decline from .7034 would equal the .7096-.6840 decline.This measured objective intersects with the 11/29 and 11/30 lows.Price below .7034 keeps this analysis intact.
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EURUSD – The 5th wave of the 5 wave bearish sequence from 1.3367 is in progress and should take price below 1.2865.The 161.8% extension of 1.3367 – 1.3051 / 1.3296 is a bearish target at 1.2787.This potential support is reinforced by the 11/17 low at 1.2761 and the 200 day SMA at 1.2799.What could follow then is a 3 wave corrective rally with initial resistance at the 1/23 high at 1.3043.Short term resistance is at 1.2948.Price below there keeps the short term bearish structure intact.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The sharp rally from 120.19 (yesterday’s low) brings in to focus the 121.78 high.A break above there exposes the aforementioned bullish targets.120.19 is critical to the bullish case but 121.26 is short term support.
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GBPUSD – We continue to favor the topping out scenario.Based upon our interpretation of the wave structure and various Fibonacci relationships, Cable is not as close to support (a potential near term bottom) as the EURUSD.A small 5 wave decline from 1.9915 followed by a correction to 1.9733 places current price is a 3rd or C wave.These are often powerful moves and estimated support is not until where the decline from 1.9733 equals the 1.9915 to 1.9644 decline.This is at 1.9462, which is very close to the 1/9 high at 1.9455.1.9644 is near term resistance and the bearish scenario is best served by price staying below 1.9733.
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USDCHF – The USDCHF rally to above 1.2546 confirms that the decline to 1.2375 on 1/23 was the bottom of a corrective wave 4.The next bullish target remains the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.1.2497 is initial support and price above there warrants an aggressive bullish stance.A dip below 1.2497 does not destroy the larger bullish structure but does merit a more cautious approach (technically…there are 5 waves up from 1.1878 but we think that this current 5th wave could extend to the mentioned measured objective of 1.2746).Only a decline below 1.2375 negates the bullish wave implications.
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USDCAD – The USDCAD is very close to our measured objectives.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
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AUDUSD – The AUDUSD broke below the neckline of the head and shoulders pattern, therefore completing the pattern and conforming the bearish structure.The 1/10 low at .7759 is the breakdown point and now resistance.Focus is now on the 11/13 low at .7614.There is still the possibility that this decline from .7936 is the C wave of a an A-B-C correction from .7979.In this case, .7714 would be where the A and C waves would be equal.A daily close above .7759 would give the latter scenario more weight.
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NZDUSD – The 7 month trendline is the pivot in Kiwi.That line is at .6900 today and increases 7 pips per day.We have focused on two scenarios over the past week.The first is that the rally from .6840 had traced out an a-b-c correction at .7034, which should then give way to weakness.The other possibility was that the rally from .6840 was a combination of 1st and 2nd waves.As long as .7096 holds as resistance, the former interpretation remains valid.Price is currently slipping below the 20 day SMA (which is turning over itself), which lends confidence to a bearish bias.
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EURUSD – It has been our working assumption that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.We have also maintained that 1.3051 was key to the bearish case.A daily close above there would do damage to the bearish structure that seems to be unfolding.Yesterday’s high was held to 1.3043 so bearish implications remain.A break below 1.2865 targets the next bearish target at 1.2784 (which is the 161.8% extension of 1.3367-1.3051 / 1.3296).The nature of the choppy trading that has persisted from the 1/12 low at 1.2865 is corrective and could be a fourth wave in a 5 wave bearish sequence from 1.3367.A drop below 1.2865 more strongly argues for the bearish case going forward.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.Weakness from 121.78 looks like the 4th wave in a 5 wave bullish sequence that began at 114.42.This morning’s low held at the 38.2% of 117.97-121.78, which is reinforced by the 1/15 low at 120.05.119.67 is key to the short term bullish case.A shorter term measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.This is the target on a break above 121.78
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GBPUSD – 5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us – and may have already started.The psychological 2.0000 figure bears watching on a break above 1.9915.However, bearish divergence with oscillators (on the daily) at 1.9915 favors a ‘topping out’ scenario.Near term, the impulsive decline from 1.9915 to 1.9644 is in 5 waves and this morning’s rally may be a corrective 2nd wave.2nd waves often retrace 61.8% to 78.6% of the 1st wave.In this instance, the 61.8% is at 1.9812 and the 78.6% at 1.9857.A rally to there could then give way to a 3rd wave down, which would likely be powerful.
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USDCHF – No change in the USDCHF: The USDCHF decline to 1.2375 on 1/23 may have been the bottom of a corrective wave 4.A break above 1.2546 would confirm the corrective nature of the decline and continue the trend of higher highs.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.As long as 1.2271 holds, the bias remains bullish.
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USDCAD – The USDCAD is very close to our measured objectives.The 50% of 1.2731-1.0927 is at 1.1830 and the pair rallied abovce there this morning.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
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AUDUSD – Our working assumption is the potential head and shoulders top that began forming in early December.A decline below .7759 would complete the pattern and expose the 11/13 low at .7614..7936, which is the top of the right shoulder, is key to the bearish structure.Daily studies are bearish now as well.MACD slope is negative, RSI and CCI are below midpoints and price is below the 20 day SMA.
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NZDUSD – The 7 month trendline is the pivot in Kiwi.That line is at .6893 today and increases 7 pips per day.The pair is testing yesterday’s high right now at .7034.We have focused on two scenarios over the past week.The first is that the rally from .6840 had traced out an a-b-c correction at .7034, which should then give way to weakness.The other possibility was that the rally from .6840 was a combination of 1st and 2nd waves.As long as .7096 holds as resistance, the former interpretation remains valid.The 78.6% of .7096-.6840 is at .7041.
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EURUSD – It has been our working assumption that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.We have also maintained that 1.3051 was key to the bearish case.A daily close above there would do damage to the bearish structure that seems to be unfolding.Yesterday’s high was held to 1.3043 so bearish implications remain.A break below 1.2865 targets the next bearish target at 1.2784 (which is the 161.8% extension of 1.3367-1.3051 / 1.3296).For perspective, we have decided to show the monthly chart this morning.The long term wave structure places the EURUSD in a wave C – which could very well see price decline below 1.1640 before all is said and done (this is of course over the course of the next year or so).This may sound crazy, but so did 1.3600 in 2000.Again, 1.3051 is key for the near term.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The pair continues to make higher highs.A measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.The USDJPY dipped below 121 this morning, but weakness was short lived and the pair remains virtually unchanged since yesterday near 121.50.The congestion area that held this morning, 120.05/87 remains initial support.A trendline drawn off of 114.42 and 117.97 reinforces support at the 120.00 figure.
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GBPUSD – Our analysis in the last week has stated that “price is expected to exceed 1.9846 before a major correction takes place.”That major correction lower may have just started.5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us.The psychological 2.0000 figure bears watching on a break above 1.9915.However, bearish divergence with every oscillator on the planet (on the daily) at 1.9915 favors a ‘topping out’ scenario.While only a decline below 1.9260 grants confidence to a longer term bearish outlook, a dip below this morning’s 1.9691 would make the decline from 1.9915 5 short term waves down and warrant more aggressive bearish action.
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USDCHF – The USDCHF decline to 1.2380 this morning may have been the bottom of a corrective wave 4.A break above 1.2546 would confirm the corrective nature of this morning decline and continue the trend of higher highs.The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.As long as 1.2271 holds, the bias remains bullish.
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USDCAD – The USDCAD is very close to our measured objectives.The 50% of 1.2731-1.0927 is at 1.1830 and the pair rallied abovce there this morning.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.The potential 2+ year bearish channel reinforces resistance at the current juncture.The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644.A decline below 1.1644 suggests that the decline has already started.
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AUDUSD – It looks like our assumption that Aussie was in the process of breaking a 3 year resistance line was wrong as the pair has plummeted 100 pips today (the ATR is 61).What we are left with is a rather well-defined potential head and shoulders top.A decline below .7759 would complete the pattern and expose the 11/13 low at .7614..7936 is key to the bearish structure.
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NZDUSD – The 7 month trendline is the pivot in Kiwi.That line is at .6886 today and increases 7 pips per day.Looking at the internal wave structure, we are more likely to favor the downside given the 5 wave decline from .7096 to .6840 which was followed by an overlapping (therefore corrective) advance to .7034.It takes a break below .6840 to confirm our position but this morning’s decline does warrant a cautious bearish stance against .7034.
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EURUSD – We maintain that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.A break below 1.2865 targets the next bearish target at 1.2708 (38.2% of 1.1640-1.3367).The rally from 1.2865 is choppy and looks corrective.Fibo resistance begins at the 38.2% of 1.3296-1.2865 at 1.3028.The early morning rally came within pips of the Fibonacci level.Former support at the 12/18 low of 1.3051 is additional resistance.A rally above 1.3051 clouds the bearish picture and suggests greater bullish potential.
http://www.dailyfx.com/export/sites/dailyfx/story-images/2007/01/dailyfx_reports/dailytechs/2.gif
USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The pair continues to make higher highs.A measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.The pair is at a short term support line right now.A break below this support line may see a dip to fibo support at the 23.6% of 117.97-121.78 at 120.88.
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GBPUSD – Our analysis in the last week has stated that “price is expected to exceed 1.9846 before a major correction takes place.”This is indeed what has happened, so be on the lookout for a reversal lower.5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us.The psychological 2.0000 figure bears watching.The 1991 and 1992 highs were at 2.0045 and 2.0100.
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USDCHF – The USDCHF has declined in what could be a 4th wave correction.As long as 1.2271 holds, the bias remains bullish.Support prior to 1.2271 is the 38.2% fibo of 1.2110-1.2546 at 1.2379 and the 50% at 1.2328.A break above 1.2546 exposes the next bullish target at the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746.
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USDCAD – The USDCAD is very close to our measured objectives.The 50% of 1.2731-1.0927 is at 1.1830 and the pair has rallied just above there this morning.The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883 and the pair is currently testing potential channel resistance (see below).This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.Former resistance at 1.1800 is now initial support.A drop below 1.1644 would grant confidence the bearish case.
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AUDUSD – The AUDUSD is coming up on resistance from the 12/8 high at .7929.The extent of the rally from .7759 strongly suggests that the next 5 wave advance is already in the works.As such, the 3 year resisting line is expected to give way.That line is just below the 1/3 high (.7979)..7858 is initial support.
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NZDUSD – Kiwi has held above the 7 month trendline and broke above .6970 this morning – (last week’s high).The rally from .6840 may be a series of 1 and 2 waves rather than a correction of weakness.This looks like the case as the pair had little trouble taking out the .7000 figure.The 78.6% of .7096-.6840 at .7041 is still potential resistance.Former resistance at .6974 is now support.
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EURUSD – We maintain that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.A break below 1.2865 targets the next bearish target at 1.2708 (38.2% of 1.1640-1.3367).The rally from 1.2865 is choppy and looks corrective.Fibo resistance begins at the 38.2% of 1.3296-1.2865 at 1.3028.Former support at the 12/18 low of 1.3051 is additional resistance.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The pair continues to make higher highs.Near term, a measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97.Former resistance at 120.87 is now near term support.
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GBPUSD – We focused last week on how much more constructive Cable was compared to the EURUSD.The pair has turned up in a 5th wave to complete the bullish sequence from 1.8515 (and the bullish sequence of one larger degree from 1.7046).Thus, price is expected to exceed 1.9846 before a major correction takes place.The rally from 1.9260 has stalled at former support centered on 1.9750.The recent weakness / consolidation looks like a 4th wave within the larger 5th wave.This 4th may be tracing out a triangle, thus support stems from the 1/19 low at 1.9694.A push through 1.9777 targets the high at 1.9846.
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USDCHF – The USDCHF has traded sideways since 1/12 (making a new short term high at 1.2546 on 1/18).A rally through 1.2546 would make the rally from 1.1878 5 waves and solidify the bullish outlook.The confluence of the 78.6% fibo of 1.2767-1.1878 / 11/6 high at 1.2578 is potential short term resistance on a break above 1.2546.The 1/16 low at 1.2416 is support.
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USDCAD – A potential resisting line from a 2+ year bearish channel is at 1.1840 today.The 50% of 1.2731-1.0927 is at 1.1830.Further, the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.A short term inverse head and shoulders continuation pattern also favors a rally to above 1.1800 before a larger turn lower.A drop below 1.1644 would grant confidence the bearish case.
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AUDUSD – The AUDUSD is coming up on resistance from the 12/8 high at .7929.The extent of the rally from .7759 strongly suggests that the next 5 wave advance is already in the works.As such, the 3 year resisting line is expected to give way.That line is just below the 1/3 high (.7979)..7858 is initial support.
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NZDUSD – Kiwi has held above the 7 month trendline and broke above .6970 this morning – (last week’s high).The rally from .6840 may be a series of 1 and 2 waves rather than a correction of weakness.Watch price action near the 61.8% of .7096-.6840, which is at .6998.A rally through the .7000 figure gives scope to the 78.6% at .7041.Stalling or a rejection at .7000 could give way to another leg down.
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EURUSD – We maintain that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.A break below 1.2865 targets the next bearish target at 1.2708 (38.2% of 1.1640-1.3367).Near term rallies have been uninspiring but resistance should cap gains near the 12/18 low at 1.3051. This is in-between the 38.2% and 50% fibos of 1.3296-1.2965 (1.3029-1.3080).
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The pair exceeded 121.38 yesterday to trade at a nearly 4 year high (121.58 intraday high yesterday).Near term, we still look for a corrective move lower.Looking at the 240 minute chart, there are 5 waves up from 117.97, so a corrective setback is reasonable.The 38.2% of 117.97-121.58 is at 120.20, which is also just above the 4th wave extreme of one lesser degree at 120.05.
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GBPUSD – We focused last week on how much more constructive Cable was compared to the EURUSD.The pair has turned up in what looks like an extended 3rd of the 5th wave to complete the bullish sequence from 1.8515 (and the bullish sequence of one larger degree from 1.7046).Thus, price is expected to exceed 1.9846 before a major correction takes place.In the short term, price has traced out 5 waves from 1.9315 (the preferred count has this as the 3rd of the 5th).The pair has turned down from 1.9777 in what is likely a 4th wave correction.The 38.2% of 1.9315-1.9777 is at 1.9601, which also is just above the 4th wave extreme of one lesser degree at 1.9589.Traditional technical tools also favor a setback – with 240 minute RSI declining from above 70.In summary, it looks like we can expect a correction to near the 1.9600 figure followed by a rally through 1.9846 that would complete a 5 wave bullish sequence from 1.7046.
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USDCHF – The USDCHF has ranged this past week and digested the strong rally from 1.2110.This consolidation looks like the beginning of a 4th wave correction that will eventually give way to a 5th wave advance.Support is at the 1/16 low at 1.2416 and the 38.2% of 1.2110-1.2546 at 1.2380.Once 1.2546 is broken, bullish targets lie at Fibonacci extensions of 1.1878-1.2271 / 1.2110.The 138.2% and 161.8% extensions are at 1.2653 and 1.2746 .This fits well with the 10/13 high at 1.2769.
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USDCAD – A potential resisting line from a 2+ year bearish channel is at 1.1840 today.The 50% of 1.2731-1.0927 is at 1.1830.Further, the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.A drop below 1.1644 would grant confidence the bearish case.
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AUDUSD – At this point, the rally from .7759 looks rather corrective and has stalled prior to the 61.8% of .7979-.7759 at .7895.With the 5 waves up from .7413 to .7979 – a 3 wave corrective setback is favored.That 3 wave setback may have already occurred with the decline to .7759.Another scenario is possible though.The decline from .7979 to .7759 may be the first of these corrective waves and the advance from .7759 to .7888 is the 2nd.A third wave within the correction would imply a decline below .7759 to near where a = c.That level would be .7685 – very close to the 50% of .7413-.7979 at .7695.A rally through the high from today at .7905 would lend confidence to the original interpretation that the pair is working higher from .7759.
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NZDUSD – Kiwi has been stationary today.The rally from .6840 looks like a bearish flag that is correcting the decline from .7096 to .6840.The turn lower on 1/6 from the 50% of .7096-.6840 at .6969 implies that the next leg may have already started.In this instance, a break of .6840 is expected near term.If .6974 (1/16 high) is exceeded, then focus shifts to the 61.8% of .7096-.6840 at .6999.
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EURUSD – The EURUSD may be forming a base from which to work higher in the short term.We maintain that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower.A break below 1.2865 targets the next bearish target at 1.2708 (38.2% of 1.1640-1.3367).The 12/18 low at 1.3051 is in-between the 38.2% and 50% fibos of 1.3296-1.2965 (1.3029-1.3080).This area should be solid resistance.
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USDJPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.The pair has exceeded 121.38 today (121.44 intraday high as of this writing).While RSI is above 70, strong market moves can leave oscillators extreme for quite some time.Looking at the 240 minute chart, there are 5 waves up from 117.97, so a corrective setback is reasonable.The 38.2% of 117.97-121.44 is at 120.12, which is also just above the 4th wave extreme of one lesser degree at 120.05.This measurement is only valid of course if 121.44 holds.
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GBPUSD – We focused last week on how much more constructive Cable was compared to the EURUSD.The pair has turned up in what looks like an extended 3rd of the 5th wave to complete the bullish sequence from 1.8515 (and the bullish sequence of one larger degree from 1.7046).Thus, price is expected to exceed 1.9846 before a major correction takes place.In the short term, price has traced out 5 waves from 1.9315 (the preferred count has this as the 3rd of the 5th).The pair has turned down from 1.9777 in what is likely a 4th wave correction.The 38.2% of 1.9315-1.9777 is at 1.6901, which also is just above the 4th wave extreme of one lesser degree at 1.9589.Traditional technical tools also favor a setback – with 240 minute RSI declining from above 70.In summary, it looks like we can expect a correction to near the 1.9600 figure followed by a rally through 1.9846 that would complete a 5 wave bullish sequence from 1.7046.
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USDCHF – The USDCHF has turned down from very close to where the 1.2110-1.2526 advance would equal the 1.1878-1.2271 advance.Equal legs are indicative of corrections and the proximity of 1.2526 skews risk to the downside.If 1.2526 is exceeded this week, then the impulsive numbered count would be preferred and focus would switch to the 138.2% and 161.8% extensions of 1.1878-1.2271 / 1.2110 at 1.2653/1.2746.Initial support is at the 38.2% of 1.2110-1.2526 at 1.2369.Daily CCI has rolled over from above 100 on the daily.This often occurs prior to a decline.
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USDCAD – A potential resisting line from a 2+ year bearish channel is at 1.1840 today.The 50% of 1.2731-1.0927 is at 1.1830.Further, the 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883.This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927.A drop below 1.1644 would indicate that this has already happened.
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AUDUSD – At this point, the rally from .7759 looks rather corrective and has stalled prior to the 61.8% of .7979-.7759 at .7895.With the 5 waves up from .7413 to .7979 – a 3 wave corrective setback is favored.That 3 wave setback may have already occurred with the decline to .7759.Another scenario is possible though.The decline from .7979 to .7759 may be the first of these corrective waves and the advance from .7759 to .7888 is the 2nd.A third wave within the correction would imply a decline below .7759.A rally through the 61.8% of .7979-.7759 at .7895 would lend confidence to the original interpretation that the pair is working higher from .7759.
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NZDUSD – Kiwi looks like it is entrenched within a bearish flag that is correcting the decline from .7096 to .6840.The turn lower on 1/6 from the 50% of .7096-.6840 at .6969 implies that the next leg may have already started.In this instance, a break of .6840 is expected near term.If .6974 (1/16 high) is exceeded, then focus shifts to the 61.8% of .7096-.6840 at .6999.
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