The most interesting developments in the crosses are signs that the EURAUD and EURNZD are bottoming out. and that Yen crosses are breaking above trendlines. It seems odd that the EURAUR/EURNZD and Yen crosses would all be bullish because risk sentiment tends to drive EURAUD/EURNZD and the Yen crosses in opposite directions. Either the outlook for one of these is wrong or market dynamics have changed. This is something to ponder.
Euro / British Pound
On Wednesday, I wrote that “the rally has accelerated so a 3rd of a 3rd wave may be underway from .8703. The trend is up regardless of near term wave count specifics as the decline from the December high is in 3 waves.” Consolidation/pullback is likely to find support at .9015, .8975, and .8940. .8703 is the bull defining level. .9269 and .9507 are target areas. I have labeled the decline from .9807 as A-B-C, which is corrective. However, the decline could also be the first part of a larger consolidation such as a triangle or flat. Keep this mind as the EURGBP approaches the mentioned points (.9269 and .9507).
Euro / Swiss Franc
There is little to say about the EURCHF technically and there will not be until the pair breaks from the triangle. The fight between bulls and bears wages on in a triangle that has been underway since October. Triangles are typically continuation patterns, so a downside break would seem to be more probable. Still, forecasting is an exercise in probabilities rather than certainties so jump the gun at your own risk. Pushing through either the top of bottom line triangle line would present a breakout opportunity.
Euro / Canadian Dollar
The series of lower lows and lower highs in the EURCAD since the December 2008 high takes the form of a wedge, which is bullish. Staying above 1.5400 keeps the bullish outlook on track. Look for support from the short term line extended from the July 30 and September 7 lows. The wedge suggests that the choppy advance from 1.5181 will give way to a strong advance- eventually testing 1.7500.
Euro / Australian Dollar
The EURAUD shows signs of a bottom. Trendline resistance is beginning to give way. This development is all the more significant given the divergent readings with momentum at the recent low. Favor the upside against the low.
Euro / New Zealand Dollar
EURNZD is similar (approaching trendline and divergence at the low) but I would say more bullish than EURAUD because the decline from 2.1250 is an ending diagonal (a.k.a diagonal triangle). Ending diagonals tend to give way to quick reversals and are often fully retraced. This guideline suggests a return to 2.1250.
Euro / Japanese Yen
At this point, we don’t know if the EURJPY (and all Yen crosses for that matter) range that has consumed the past many months is a consolidation or reversal pattern. I mentioned Wednesday that “bulls should keep stops below 131.00. The rally from there is impulsive so a rally is expected to clear 134.45 regardless of the larger trend.” Risk can now be moved to 132.44 on the break of a short term resistance line. Potential support is at 133.40 but focus is now on 136.13.
British Pound / Japanese Yen
The British Pound has lagged its competitors of late. Whereas the other Yen crosses are well above multi-month range lows, the GBPJPY is just over 1% from its low (as of this writing, the GBPJPY is near 148.50). A break below 146.74 would confirm a significant double top near 163.00. However, there is the possibility of a sizeable rally prior to a test and break of 146.74. The decline from 163.15 counts well as an impulse and price action since 149.00 (9/2 low) may be carving out an expanded flat (which seem to be common in Yen crosses). Trading above the resistance line shown would make this scenario favored. The target would then be above 153.44.
Swiss Franc / Japanese Yen
The CHFJPY is in the same position as the EURJPY. Is the multi month range a consolidation or reversal? Only time will tell. Still, the pair has shown technical strength by breaking through short term trendlines so favor the upside against 87.16. Beware of the potential for supply at 89.67 and 90.65.
Canadian Dollar / Japanese Yen
The recent break of trendline resistance in the CADJPY suggests it is better to be long than short in the near term. It is unclear what pattern is unfolding from above 90.00, but clarity will come with time. For now, respect the rally through trendline resistance. 84.27 is potential support but the top side of the former resistance line has held thus far.
Australian Dollar / Japanese Yen
There are several patterns that could be unfolding in the AUDJPY; from head and shoulders tops, bottoms, triangles - the picture is mixed. Given the trendline break (which then held as support) and the technical considerations of other Yen pairs, it is best to favor the upside. I wrote Wednesday that “the upside is favored against 76.39.” Risk can be moved to 77.32 now. Trading through .8000 exposes .8200.
New Zealand Dollar / Japanese Yen
Having broken above a resistance line, the NZDJPY has sights set on 66.00. Short term support is concentrated at 64.00 and 63.00 is the key level.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
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