-EURGBP vulnerable to break lower from consolidation
-EURCHF in center of multi-month range
-Euro / commodity crosses turning higher
Euro / British Pound
Since 6/22, the EURGBP has traded in a choppy 300 pip consolidation. The nature of the trade suggests that the pattern is corrective and that the pair will eventually drop below .8400. Favor the downside against .8660 in anticipation of a break below .8400 and test of the former 4th wave price area between .7690 and .8190.
Euro / Swiss Franc
Since March, the EURCHF has traded in a narrow 400 pip range. Price is in the middle of this range now. There is no directional bias until price breaks the range. The 200 day SMA is pointed up and is below price at 1.5136 (potential support).
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. The pair is nearing former congestion (circled), which rests below the 61.8% retracement of the decline from 1.6334 at 1.5894. Choppy price action is likely in the former congestion zone but favor the upside until at least the top of the wedge line. Trading through the line would signal a breakout opportunity.
Euro / Australian Dollar
I wrote last week that “the EURAUD is trading at its lowest level since August 2008. Look for signs of a bottom (today’s rally is a good start) as daily RSI is divergent with the new low.” The EURAUD held its August 10th low and the short term pattern is promising (rallies are impulsive from the low). Short term support is at 1.7030.
Euro / New Zealand Dollar
I have maintained in recent weeks that “the decline from the February high is nearing and end as a 5th wave diagonal. Expectations are for a recovery back to 2.3600 (full retracement of the diagonal). Reversals from diagonals can be sharp.” After several false bottoms, the EURNZD made a fresh 2009 low today before reversing sharply. This may be the beginning of the run back to 2.3600. Aside from wave structure, RSI turning higher from below 30 supports bulls.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday) and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream. Contact Jamie at [email protected]
