The clearest cross setups are the EURCAD long (long term wedge breakout), and EURJPY long (bullish candle at support line on Friday).
Euro / British Pound
Continue to favor the upside although it is possible that a small 4th wave is unfolding as a triangle right now. Parallel channel support is at .9070 today and increases 21 pips per day. A potential target is .9466 (which is where the rally from .9076 would equal the .8453-.8843 advance). This is also close to former chart resistance at .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 seems 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 EURCAD break through the top of the wedge is bullish but price needs to hold above the short term support line/1.5554 in order for action to remain constructive. The long term target is above 1.7500.
Euro / Australian Dollar
“As mentioned in recent weeks, daily momentum studies are divergent with price lows. This warns of a low, but until a bullish price pattern emerges, going long is dangerous.” The turn higher from the short term (albeit downward sloping) support line is a good start. I can envision an inverse head and shoulders pattern (notice the multiple left shoulders) forming over the next few weeks. The 61.8% of the rally from 1.6508 has held so far. 1.6580-1.6635 is potential support as well.
Euro / New Zealand Dollar
Trendlines are meant to be broken. The number of recent tests of the EURNZD line suggests that once broken, the rally could be exceptionally strong. Still, the EURNZD has yet to stabilize. 1.9950 is the 61.8% of the 1.6326-2.5815 rally and may offer support.
Euro / Japanese Yen
For the past 6 + months, the pair has traded in a large sideways (slightly contracting) range. The pattern could be just a consolidation prior to additional gains or a significant distribution and therefore reversal. There is the specter of a head and shoulders top. Coming under the neckline (tested, but no daily close below yet) would turn conditions bearish. It is possible that the EURJPY has formed a triangle since the end of April. The battle lines have been drawn. Given Friday’s bullish candle at the neckline/lower triangle line, reward/risk favors bulls.
British Pound / Japanese Yen
Target areas are 139.00 (100% extension) and 130.40-131.40 (161.8% extension and a March pivot). The line extended from the August and 9 and 23 highs can be used as a point of reference from which to short. That line is at 147.27 today (Monday) and decreases 40 pips per day. Former support at 146.74 reinforces resistance near the line tomorrow (as does the 200 day SMA).
Swiss Franc / Japanese Yen
The CHFJPY is in the same position as the EURJPY. Is the multi month range a consolidation or reversal? Time will tell. A break below the neckline (tested today but held) would suggest that the next move is lower. 87.80 and 88.15 would be potential resistance levels on a push through 87.35.
Canadian Dollar / Japanese Yen
The CADJPY has broken below a support line but the 200 day SMA has held. A bearish outcome remains possible below 86.07. Exceeding that level exposes the high. 84.72 is potential resistance.
Australian Dollar / Japanese Yen
The AUDJPY spiked below 76.39 (range low) Friday but trades back at a former support line. A bearish outcome remains possible as long as price is below 80.08. Exceeding that level exposes the high at 82.05. The next level of chart support is not until 70.74.
New Zealand Dollar / Japanese Yen
A clear wave pattern can be seen in the structure of the NZDJPY rally since February. The advance is an A-B-C correction with wave C as a diagonal. Price broke below the lower diagonal line last week but a longer term support line has held so far. Still, the diagonal implications are bearish. Reversals following diagonals are usually sharp (but the diagonal may not be complete yet).
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (Monday), 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.
Contact Jamie at jsaettele@dailyfx.com if you would like to receive his reports via email.
