Technicals
British Pound Testing Potentially Strong Resistance
Monday, 8 Mar 2010 12:31 EST at 12:31 by Jamie Saettele · Leave a Comment
Euro / US Dollar
A larger EURUSD rally, probably a 4th wave, may be underway towards 13870-14030. 4th waves are often choppy, usually flats or triangles. An impulsive rally from 13433 and corrective decline from 13738 may be complete. This is bullish but I am uncomfortable with long positions at this point with equities testing key resistance levels (another view is presented with the USDCHF).
British Pound / US Dollar
The GBPUSD has met resistance from former support / the 38.2% of the decline from 15825, at 15181. Channel resistance reinforces resistance at the current level. I am looking for a turn lower in a 5th wave. Price should not come close to 15533.
Australian Dollar / US Dollar
The AUDUSD is nearing 9148, which is where the rally from 8796 would sport 2 equal legs. 9170 would be additional resistance. 9050 is potential short term support. A drop below 8974 is needed in order to suggest that the larger trend has turned back down.
New Zealand Dollar / US Dollar
I wrote last week to “favor the downside against 7022. A move above there would probably give way to strength above 7088 and a test of 7156.” The NZDUSD has exceeded 7022 and short term support is 6940/80. Action since 7088 could also be a triangle.
US Dollar / Japanese Yen
The USDJPY rally has reached the 61.8% retracement of the decline from 9217. This level is reinforced by former support. Given the extent and structure of the advance, it is certainly possible that an A-B-C decline is complete from 9380. Expect consolidation / pullback. Initial support is 90.
US Dollar / Canadian Dollar
The USDCAD has dropped below 10368 and to its lowest level since mid January. The potential for a bottom and reversal remain, especially since the decline from 10577 is now 161.8% of the decline from 10684-10491 and the decline from 10684 is 100% of the decline from 10784. Even if the decline from 10577 is a 3rd wave (rather than a c wave), a 4th wave correction would probably reach at least 10368.
US Dollar / Swiss Franc
The decline from the 10900 high February can be counted as a 3 wave setback and the rally from the low (10646) may be an impulse. The other count is a double zigzag (a-b-c-x-a-b-c). Confusion reigns at this point and the key levels are 10646 and 10900. Until one of those levels gives way, the market remains in a range.
Gold
No change: “Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders). In order to complete the pattern, gold would sell off once more towards 1075 before finding a right shoulder low.”
Light Crude
Crude remains strong and the larger trend is considered up as long as price is above 6859 (under there completes a longer term head and shoulders top). Still, at least a setback looks likely near term as there are 5 waves up from the February low (and wave v is a diagonal). 8286-8350 is potential resistance from a gap. Expect weakness to at least below 7705. 7613 is potential support. It is possible that the rally from the February low completes wave C of an A-B-C flat. An impulsive decline from near current price would confirm as much.
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 tojsaettele@dailyfx.com.
