· Euro Breaks Resisting Trendline<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· Japanese Yen Drops Two Big Figures
· British Pound Fights Back
· Swiss Franc Targets 1.2300
· Canadian Dollar Holds At Support
· Australian Dollar Skyrockets
· <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand Dollar Corrects
EUR/USD The EUR/USD scenario played out just as we expected with the zone of support that we have focused on the past two days between the 61.8% and 78.6% fibos of 1.2481-1.2618 between 1.2533 and 1.2510. We mentioned that a break above the mentioned resisting trendline could propel the pair to the confluence of the 6/22 high / 38.2% of the 1.2976-1.2481 at 1.2670/77 as well as the 50% fibo at 1.2728. Both of those objectives were met with the high in early European trading this morning at 1.2730. Where do we go from here? This consolidation / correction from 1.2730 is likely the fourth wave of a 5 wave bull sequence on the hourly and support is at 6/22 high of 1.2677 as well as the 38.2% fibo of 1.2519-1.2730 at 1.2650. A dip to one of these levels opens up the door for a 5th wave up to the 61.8% fibo of 1.2976-1.2481 at 1.2787 or the 6/8 high at 1.2807.
USD/JPY
GBP/USD Cable is a bit choppier than the other majors. Still, the breaking of a minor trendline does lend a bullish bias over the medium term. In the very short term, hourly RSI (falling below overbought) suggests that a test of yesterdays high at 1.8294 is possible. Fibo resistance from the double top at 1.8879 to yesterdays 1.8090 low comes in at 1.8390 (38.2%). The 50% fibo of 1.7227-1.9025 and the fact that the distance from 1.8879 is almost exactly 161.8% of the distance from 1.9025-1.8529 both favor the argument that an important low is in place at 1.8090.
USD/CHF As the inverse of EUR/USD - USD/CHF broke below its trendline. We have focused in recent days that chart structure on the daily shows that the rise from 1.1919 is corrective when compared to the preceding decline. The diagonal triangle appears to be coming to an end as evidenced by the proximity of the apex. A sustained break below the 1.2335/47 (former resistance) would do wonders for bears. The pair has broken below. The 161.8% extension of 1.2529-1.2397 from 1.2499 comes in at 1.2293 (1.2499 (1.618 * (1.2529-1.2397))) (38.2% of 1.1919-1.2525 is also 1.2294). Additional weakness beyond the fibo extension exposes a previous short term triple bottom from 6/14, 6/15 and 6/16 at 1.2262/66. Resistance is at yesterdays low of 1.2356 as well as the 38.2% fibo of 1.2497-1.2304 at 1.2378. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
USD/CAD The ascending triangle that we have focused on is still in play as price has been supported at the lower upward sloping trendline. Also at that level is the 161.8% extension of 1.1283-1.1172 from1.1262 (1.1262 (1.618 * (1.1283-1.1172))). However, the move down from 1.1262 is in 5 waves and if the pair breaks below the trendline (on chart below), then that break must be respected. Support would be at the 6/21 low of 1.1036. Bullish divergence on the hourly with oscillators suggest a continued bounce. Resistance is at the 38.2% fibo of 1.1262-1.1077 at 1.1147.
AUD/USD AUD/USD has blasted by both the .7300 and .7400 figures. Daily oscillators are bullish after the 150 pip rise that has occurred over the past day and a half. The 6/16 high at .7443 is just above current price and is immediate resistance. A break above there exposes a fibo confluence of the 50% fibo of .7652-.7270 / 38.2% fibo of .7791-.7270 at .7460/67. Short term (hourly) oscillators are extremely overbought but such is the case with such an impulsive move that follows contracted volatility. Be careful about reading into the overbought signals until bearish divergence is present. Support would be at the 6/22 high of .7418 as well as yesterdays high at .7403.
NZD/USD Kiwi broke back above the .6000 figure after bottoming at .5927. The .5927 low was mere pips below the 161.8% extension of .6443-.6140 from .6428 at .5939. The rally has stalled at the 38.2% fibo of .6428-.5927 at .6118. It is possible that the rise from .5927 is a 4th wave correction of a 3rd wave down from .6428. In this scenario, Kiwi would eventually challenge the .5927 low and work lower. Continued strength exposes the 50% and 61.8% fibos of the mentioned bear wave from .6428 to .5927 at .6177 and .6236. Oscillators on the daily are rising but are still below midpoints and thus mixed.
Glossary of Terms
CCI(20) 20 day Commodity Channel Index
> 0 bullish
0 > bearish
> 100 extremely bullish
-100 > - extremely bearish
RSI(14) 14 day Relative Strength Index
> 50 bullish
50 > bearish
> 70 overbought
30 > - oversold
MACD ? - MACD slope (MACD MACD[1])
> 0 bullish
0 > - bearish
Mom(8) 8 day Momentum (shorter-term direction)
> 0 bullish
0 > - bearish
ATR(14) 14 day <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />AverageTrueRange (volatility)
Medium 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low 25th percentile* >
ADX(14) 14 day Average Directional Index (directional strength)
> 30 strong
30 > - weak
*measured against past 3 months
