Dollar / Yen Fails at 200 day SMA; 93.50 Remains Key

Euro / US Dollar

The EURUSD rally from 1.2886 has exceeded the level at which it would be equal to the 1.2454-1.3742 rally (1.4174), which puts 1.4723 at risk from a probabilistic standpoint. The alternate, in which a larger complex correction will end above 1.4723, does remain valid. Overbought and divergent RSI favors a top before 1.4723. Coming under 1.3792 would make it highly likely that a top is in place but if sufficient evidence arises that a top is in place prior to that point, then I’ll discuss as much here.

British Pound / US Dollar

There is no change to the bigger picture pattern in which the rally from 1.3500 is a 4th wave that will eventually be fully retraced. As mentioned last week “although the rally is extended, there is no sign of a top yet.” The next level of potential resistance is 1.6680-1.6830. This is a former 4th wave price extreme and 50% retracement of the decline from 2.0162. RSI is above 80 on the daily so beware of a pullback prior to completion of the larger advance.

Australian Dollar / US Dollar

Nothing has changed regarding long term bearish implications (5 wave decline from 2008 high indicates additional bearish potential and the corrective rally from .6000 confirms as much). RSI divergence along with mature wave structure at multiple degrees of trend (3 waves up from .6000, 5 waves up from .6245 and 5 waves up from .6950) favors a reversal. Like the GBPUSD, there are multiple warning signs that the pair will top but no evidence of a top yet. The next level to watch as potential resistance is the 61.8% of the decline from .9856, at .8385. Staying above .8050 keeps the near term trend pointed up.

New Zealand Dollar / US Dollar

The NZDUSD rally from .5484 is at the point at which it equals the .4890-.5987 rally (.6581). This level is defended by the 50% retracement of the decline from .8220-.4890; at .6555. The Fibonacci confluence combined with overbought RSI favors a reversal. Coming under .6444 would suggest a reversal.

US Dollar / Japanese Yen

The triangle count remains valid. Under this count, wave d (triangles unfold in 5 waves (a-b-c-d-e)) of a B wave triangle is underway towards 98-99. A drop below 93.50 would favor a bearish breakout strategy against 97.26.

US Dollar / Canadian Dollar

The 61.8% of the rally from .9055 to 1.3068 is at 1.0588 and is potential support. The speed of the decline from 1.1820 and the RSI extreme make it likely that the decline is a 3rd wave. As such, favor some consolidation this week before a drop to a new low to complete wave v of C.

US Dollar / Swiss Franc

The USDCHF count is the same as the EURUSD count (but as the inverse). There are 2 competing counts, one that calls for formation of a low prior to 1.0367 and one that gives scope to a drop below 1.0367 before a bottom and reversal. In the case of the latter, the current decline would be wave 3 of C and would extend from near current price. Only a rally through 1.0957 would suggest that a low is in place.

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

DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.