The US dollar gained for a second consecutive week. The dollar is on track to explose higher in wave 3 (or C) of its multi year rally that began in 2008. Nothing is for certain but risk levels are clearly defined.
Euro / US Dollar
| | Joel: The break to a fresh weekly lower low now helps to confirm our outlook for a top by 1.4845, with deeper setbacks now projected back into the 1.4100-1.4200 area over the coming days/weeks. Look for a lower top now by 1.4720, with a test of initial support now by the 50-Day SMA in the 1.4400 which has been supporting over the past several months. A close below the 50-Day should accelerate declines. | | Jamie: As long as the EURUSD is below 1.4680, my working assumption is that an important top is in place above 1.4800 (either a B wave or 2nd wave high within the bear that began at 1.6000 in 2008. There is a plethora of big picture bearish evidence, including daily wave count (far more important than hourly wave count), COT and other sentiment indicators, etc. Also, the decline from 1.4550 could be a leading diagonal as wave i and the rally to 1.4680 wave ii. |
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British Pound/ US Dollar
| | Joel: The much talked about neckline of the major h&s topping pattern has now finally been triggered with the result to likely now open a measured move decline towards the 1.5000 area over the coming weeks. Look for a lower top now by 1.6130, to be confirmed on a break below 1.5770 over the coming days. Below 1.5770 opens a fresh downside extension to initial support by 1.5430 in the form of the 200-Day SMA. | | Jamie: Former support held as resistance (1.6111) and a short term channel defines the trend for now. A near term target is 1.5290 (161.8% extension of 1.7050-1.6111). The trend is down below 1.6130. 1.5923 is potential resistance. |
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Australian Dollar / US Dollar
| | Joel: Weekly studies are well overbought and with a sequence of 5 consecutive weekly higher lows now broken, the market could indeed be warning of a major top by 0.8860. A close on Friday below 0.8680 will set up a bearish outside week and confirm negative outlook. | | Jamie: Following the break to a new 2009 high, the AUDUSD declined in 5 waves. .8666-.8720 is the resistance zone and bears are favored against the high (.8866). If that level fails to hold, then focus would shift to .8950 and .9030. .8950 is a former support level and .9030 is the 78.6% retracement of the decline from the 2008 high. The AUDUSD has tested channel support but the structure of the decline (5 waves, as mentioned) suggests that the support line will be penetrated sooner rather than later. |
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New Zealand Dollar / US Dollar
| | Joel: A remarkable string of 11 consecutive weekly positive closes could finally have come to an end, with the market failing to extend gains beyond the previous weekly/2009 high by 0.7315, and trading lower on the week. While at this point it is still too early to call for a top with the market only confined to inside week price action, a negative close and subsequent break below critical shorter-term support at 0.7015 will help to confirm our bearish outlook for the pair. | | Jamie: NZDUSD price action since its 2009 high has been choppy. The topline of a channel since July and the midline of a channel since March rejected the NZDUSD advance but the NZDUSD has yet to come off much. The trend is bearish below .7260 towards .6900. |
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US Dollar / Japanese Yen
| | Joel: While the overall structure remains intensely bearish, the recent weakness leaves daily studies in need of a healthy corrective bounce. Look for the 88.25 weekly low to hold for now ahead of some corrective upside over the coming days back towards the 93.00-94.00 area. However, any rallies are classed as corrective with a retest of the critical matched trend lows from 2008/2009 at 87.15 expected. | | Jamie: Former support has held as resistance earlier this week, keeping us looking lower. Trading above the short term resistance line extended from the 9/21 and 9/24 highs would be a sign that something more constructive is taking place. Staying below 90.50 keeps the trend pointed down towards the double bottom at 87.10. |
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US Dollar / Candian Dollar
| | Joel: Price action has been extremely choppy and the smooth recovery that we had anticipated out from the 1.0600’s has not gone as smoothly as we had hoped. Nevertheless, the market does seem to have found a formidable support by 1.0600 and our core constructive bias is intact. We continue to look for the formation of a medium-term higher low by 1.0600 and above the 2007 historic 0.9055 lows, ahead of fresh upside into the 1.2000’s over the medium-term. Look for a break above 1.1125 to accelerate. | | Jamie: Maintain a bullish bias above 1.0650. The rally from 1.0588 could be a series of 1st and 2nd waves. This count is extremely bullish and gives scope to an extended rally. With the USDCAD back above the former channel, confidence in the upside is increased. Clearing 1.1130 would expose 1.1417 (former support). |
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US Dollar/ Swiss Franc
| | Joel: Has ended a sequence of consecutive weekly lower tops, with some good upside follow through seen following the previous week’s bullish doji-like reversal. We contend that a major base is now in place by 1.0185 and look for an acceleration of gains over the coming days back above 1.0500 and towards the 1.0700 area. | | Jamie: The USDCHF daily wave count warns (and has been warning) of a significant low. The USDCHF has broken through the top of a short term channel and is just below the top of a longer term channel line. Favor the upside. |
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Euro / Japanese Yen
| | Joel: Confined to the middle of a multi-week range, with the market most recently failing by the range highs ahead of 140.00 and rolling back over. Our bias is mildly bearish over the coming weeks and we look for a drop back into the lower range by 125.00-127.00 | | Jamie: 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. Trading above 135.52 would favor this interpretation. Levels that likely serve as resistance are 132.45 and 133.30. |
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British Pound / Japanese Yen
| | Joel: Has broken below the major neckline by 146.80 that we had written about in previous commentary and the market could be looking for some bearish continuation ultimately back into the 120.00’s over the coming weeks. That being said, the aggressive move lower has left daily studies oversold and we would recommend selling rallies over breaks. | | Jamie: 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 Monday and decreases 40 pips per day. Former support at 146.74 reinforces resistance at the line on Tuesday. |
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Euro / British Pound
| | Joel: We still hold onto an overall bearish bias with a medium-term lower top sought out below 0.9500, ideally by this week’s 0.9305 high, ahead of the next major decline. While a bearish weekly close is encouraging, a break back below 0.8985 will confirm and accelerate declines. | | Jamie: Former resistance held as support (as so often occurs) in the EURGBP just below .9100. Expect a push through .9306 as long as channel support holds. There is no change to this outlook. 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. .9150 is short term support. |
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TRADE LIST *Entry prices for trades that are recommended ‘at market’ are listed as the price at the time of publication
