The next US dollar bull leg within a multi-year bull trend may be underway. Levels that define the trend are clear across the board and reward / risk is heavily in favor of US dollar bulls.
Euro / US Dollar
Staying below 1.4181 keeps the trend pointed down. The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves. Under this scenario, the next decline will be a third of a third (powerful). It is also possible that the current decline is wave 4 of a diagonal from 1.2454 (alternate labels). I wrote yesterday that a push above 1.3935 may be required in order to complete the small second wave from 1.3747. 1.4010/30 should provide resistance in such an event. Price has exceeded 1.3935 and is approaching the 61.8% of the former decline, which is at 1.4015. If reached, expect stiff resistance near there.
British Pound / US Dollar
I want to stay focused on the big picture because it is possible that the GBPUSD is at a significant turning point. Remember, the entire decline from 2.1160 is most likely unfolding as an impulse (5 waves) and just 3 waves have unfolded. The rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated. Staying below 1.6626 keeps the topping scenario intact. I wrote yesterday that there is the risk of a rally through 1.6510 before the larger trend turns down for good. Such a scenario would prevent a low risk short opportunity. The GBPUSD reached 1.6470 today before turning down in impulsive fashion. Favor the downside.
Australian Dollar / US Dollar
The AUDUSD count shown above is similar to the GBPUSD in that wave v of C may be truncated. The rally from .7823 is in 5 waves but failed to exceed .8269. Usually, this would signal that an entirely new bull cycle is underway. But given the extension of the rallies from .6245 and .6986, this scenario is not probable.
New Zealand Dollar / US Dollar
My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal, which is common. Staying below .6474 keeps the near term trend pointed down.
US Dollar / Japanese Yen
The triangle continues to play out. Wave e of the triangle should complete later this week. There is potential support at 95. There may be an opportunity to go long the USDJPY soon against 93.50 on anticipation of the terminal thrust that will end above 101.50. However, in looking at multiple markets (equities, metals, oil, FX), it appears that fear is about to return to the markets with a vengeance. As such, the USDJPY count in which the drop from 101.50 is a series of 1st and 2nd waves would be preferred. Near term, there is resistance in the 97.00/50 zone.
US Dollar / Canadian Dollar
It is possible that the USDCAD decline from 1.3068 is complete but there remains a competing alternate in which the pair will drop to a new low (below 1.0780) before resuming the larger rally. The 61.8% of the advance from .9055 is at 1.0417 and is potential support. Potential short term support is at 1.1200.
US Dollar / Swiss Franc
The USDCHF pattern is the exact same as the EURUSD (but as the inverse) 5 waves up from 1.0589 suggest that an important low is in place. Having yet to exceed 1.0990 (3 wave decline from there), favor the upside against 1.0650. A small second wave may complete on a drop below 1.0820. Fibonacci support extends to 1.0770.
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.
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