British Pound Breaks Out



Tue, 05 May 2009 10:32:00 -0400



By Jamie Saettele, Senior Currency Strategist strategist@dailyfx.com




-EURUSD closes above channel resistance
-GBPUSD breaks through
-AUDUSD nearing objective
-NZDUSD basing for a break as well?
-USDJPY potential head and shoulders

2009.05.05_tech_1

Euro / US Dollar

2009.05.05_tech_eur

The push above channel resistance indicates that the EURUSD corrective advance from 1.2510 is not yet complete.  In fact, recent developments suggest a rally through 1.3742 and possibly as high as 1.4150-1.4200 (61.8% of decline from 1.4723 and 100% extension of 1.2510-1.3742).  Staying above 1.3190 keeps this outlook intact.

British Pound / US Dollar

2009.05.05_tech_gbp

The only statement that I can make with a high degree of certainty is that the rally from 1.35 is a larger 4th wave (corrective) and that it is highly probable that 1.3500 will be broken later this year.  BUT, as is the case with the EURUSD, a larger advance seems likely prior to the next leg lower.  Staying above 1.4703 keeps bulls in control and Cable on a path towards 1.5728 (200 day SMA near there as well). 

Australian Dollar / US Dollar

2009.05.05_tech_aud

The correction from the October low is still underway.  The rally from .6953 is wave v of C and an objective is .7630 (which is where wave v of C would equal wave i of C).  This is close to the 50% of the decline from .9822.  Staying above .7228 keeps bulls in control. 

New Zealand Dollar / US Dollar

2009.05.05_tech_nzd

The head and shoulders ‘look’ is still there but the decline from .5987 is in 3 waves, which warns of additional upside potential.  Also, the right shoulder is consuming too much time.  Remaining above .5624 keeps the NZDUSD on a path towards higher prices.

US Dollar / Japanese Yen

2009.05.05_tech_jpy

The long term trend remains down and I expect a resumption of that trend although there is near term upside potential.  A potential head and shoulders top that is evident.  Coming back beneath the 200 day SMA would begin to suggest that the decline has resumed. 

US Dollar / Canadian Dollar

2009.05.05_tech_cad

A larger USDCAD decline is underway towards 1.1359 and perhaps even lower.  Weakness, which is accelerating, indicates that 5 waves from .9055 are complete at 1.3068.  1.1980 is short term resistance.

US Dollar / Swiss Franc

2009.05.05_tech_chf

The USDCHF decline is also likely to extend.  1.0925 is the 61.8% of the advance from 1.0367 and potential support.  Staying below 1.1606 keeps the pair on a path lower.  Short term resistance is at 1.1450/75.

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, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close.  He is also the author of Sentiment in the Forex Market.
 
Please send comments about this report to jsaettele@dailyfx.com


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