The USDJPY is approaching a trendline that has held price action since the 95.72 low. The line is near 107.25. A break below there would present a bearish breakout opportunity.
The chart shown last night warrants another look. A 5th wave terminal thrust may be complete below 1.44 and a bottom in place. Price has pushed through the top side of the channel that had contained wave 5, signaling the reversal. The top side of that line now acts as support. A bullish bias is warranted against 1.4385.
Repeating what we’ve mentioned in recent days; “the USDJPY has made a series of lower highs and lower lows since the August top at 110.65. Favor the downside as long as price is below 110.28 (price ideally remains below 109.72).” Also, 3 month volatility is at a level that typically precedes rapid declines. A break of the trendline drawn off of the March and July lows would be a strong bearish signal.
It is not clear as to whether a low is in place for the GBPUSD, but a turn is imminent. COT positioning is the most extreme in its history by some measures (net speculative shorts and net commercial longs). Divergence with RSI below 30 on the 60 minute chart for an extended period of time favors at least a sharp pullback if not an outright reversal. 1.7950 is potential resistance.
The USDCHF is in the exact same position as the EURUSD, but as the inverse. The rally from the triangle is in 5 waves and likely complete. Moves from triangles are terminal so a large decline is probably in its early stages. The moving average on this chart is a 120 hour SMA…or 5 day SMA (120 hours in 5 days). Coming below there would be a strong signal that the trend has turned down.
The outside day along with RSI divergence suggests with a high probability that a top is in place. “The high of 1.0775 was just pips away from an important Fibonacci confluence at 1.0791/98 (61.8% ext. of the .9055-1.0378 advance) and 61.8% retrace of the decline from 1.1875 to .9055. A return to the center of the triangle near parity is probably underway now (at minimum).”
There is still a chance that a flat is underway and that the NZDUSD will turn higher from near current price and complete its correction above .7215. However, there is also a very bearish count that treats the decline from near .72 as a series of 1st and 2nd waves. A 3rd of a 3rd would begin soon, but not until a push through .6896. .6940 is potential resistance. The bearish count is valid as long as price is below .7067.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals every weekday morning (9-10 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
Contact him at [email protected]
