Technicals

Dollar Plunges to Start Week

Euro / US Dollar

The bearish count is no longer valid since the EURUSD has exceeded 1.4935.  What’s more, the rally from 1.4800 is impulsive (5 waves), which suggests that the larger trend does remain up.  1.4950, 1.4920, and 1.4880 are potential short term supports.

British Pound / US Dollar

The GBPUSD has been in a consolidation mode since late May.  Price has traded in a wide 1300 pip range since then in what could be corrective (continuation of strength) or distributive (reversal of strength).  Structurally, movements since 1.7050 appear corrective (3 waves), which would suggest a triangle, flat, or leading diagonal (all patterns favor lower prices from here).  1.6680 and 1.6750 are resistance levels.

Australian Dollar / US Dollar

Having exceeded and reversed from above .9334, the minimum expectations for wave .v of v of C has been met…respect the potential for a double top (which would be confirmed on a drop below .8900), especially when considering divergent momentum readings and patterns of other USD crosses.  More importantly, there are 5 waves down from .9410, confirming that a top is in place, which favors selling rallies.  The 61.8% of the decline from .9410 is being tested.  Price ideally turns over now.

New Zealand Dollar / US Dollar

Since the top at .7640, NZDUSD declines are impulsive (5 waves) and rallies are corrective (3 waves).  The larger trend has turned down and the objective is below .7080 (and probably much lower).  .7405 is potential resistance and price needs to stay below .7530 in order to keep the bearish count on track.

US Dollar / Japanese Yen

The bigger picture pattern is constructive. Either a triangle or complex correction is underway since December 2008.  The next leg should be up towards 101.50 (maybe even above).  One possibility from 88.00 is a leading diagonal as either larger wave A or 1 from 88 to 92.35.  A larger B or 2^nd wave may be complete as a double zigzag from 92.35.  The more time that this correction consumes, the less confidence I have in the count.  Bulls need to see an impulsive rally from current levels.

US Dollar / Canadian Dollar

A double zigzag decline from 1.3068 is considered complete and the pair has carved out a solid 1-2 base (5 up and 3 down) since the October low.  A wave ii low is in place at 1.0415, which places the pair in wave iii higher targeting a break of 1.0875 followed by Fibonacci extensions of 1.1090 and 1.1500.

US Dollar / Swiss Franc

The USDCHF is in the exact same position as the EURUSD (just as the inverse).  The bullish count is no longer valid as price has come under 1.0120.  The triangle count is now favored.  1.0120 is now resistance.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum.  He is the author of Sentiment in the Forex Market.  Follow his intraday market commentary and trades at DailyFX Forex Stream.   Send requests to receive his reports via email to jsaettele@dailyfx.com.