Euro Approaching Resistance from Multiple Measures

Thu, 19 Mar 2009 10:00:57 -0400

By Jamie Saettele, Senior Currency Strategist

-EURUSD risk moved up to 1.3530, target placed at 1.38
-AUDUSD risk moved up to .6810, target still above .7275
-NZDUSD risk moved up to .5460, target placed at .58
-USDJPY resumption of long term downtrend?


Euro / US Dollar


The diagonal has been fully retraced (began at 1.3333) and then some.  In fact, the EURUSD has exceeded the 50% retracement of the decline from 1.4723 and is closing in on the 61.8% at 1.3811.  The 200 day SMA (not shown) is at 1.3907 today and sloping down.  There is a zone that I am showing on this chart with horizontal lines defined by 1.3594 and 1.3959.  This is the First of Year (FOY) pivot zone and is calculated with the first two weeks of yearly data.  This level tends to define the trend for the year.  I’ll be looking to short over the next several weeks in this zone.  Also, move risk on existing longs to 1.3530 and place a limit to take profit at 1.38…the EURUSD has advanced for 8 consecutive days now so risk of at least a pullback (even a top) is increased.  IMPORTANT:  the longer term trend is still viewed as down since the decline from 1.4723 is an impulse.

British Pound / US Dollar


A B wave low is in place for the GBPUSD.  The GBPUSD soared through the top of the channel that contained wave B and the target for the pair is above 1.50 (wave B origin).  A triangle is still possible but I favor the flat for reasons that I mention in the special report (see the link).  Near term, Cable is accelerating in wave 3 of C and price should remain above 1.4156.  The best strategy is to buy pullbacks against that level.  I will post alerts at dailyfx if I see such an opportunity.

Australian Dollar / US Dollar


The AUDUSD has exceeded the February high at .6857.  Like the EURUSD, the AUDUSD has advanced for 8 consecutive days now.  The risk of a pullback is increasing but bullish potential in the AUDUSD is more so than for the EURUSD.  It is worth staying long but move risk to .6810.

New Zealand Dollar / US Dollar


The NZDUSD is similar to the AUDUSD in that the risk of a pullback is increasing.  As I’ve mentioned in recent weeks, “the bullish target zone / potential topping area for the NZDUSD is between .5457 (former 4th wave and 50% retracement) and .56 (61.8% retracement).”  Price has nearly reached the upper end of this area but momentum is strong, so don’t be surprised if .56 fails to hold.  The lower end of the FOY pivot zone (see EURUSD for explanation) is at .58.  That is the target area.  Move risk to .5460.

US Dollar / Japanese Yen


The longer term USDJPY decline may have resumed.  The advance from 87.09 is in 3 waves and price has dropped below the wave A high at 94.67, confirming that the decline is in 3 waves (and can not become an impulse).  I’ll be looking for opportunities to short going forward.

US Dollar / Canadian Dollar


The drop below 1.2350 negates the previously held bullish bias.  The USDCAD did exceed its wave 3 terminus on March 9, so it is entirely possible that that advance completed wave 5 within a 5 wave advance from the 2007 low. Price has also dropped beneath its 55 day SMA, which favors bulls.

US Dollar / Swiss Franc


Watch for USDCHF support from Fibonacci all the way down to 1.0925.  The decline from 1.1973 is wave C of a flat (an extremely violent flat at that) that should lead to formation of a secondary low (primary low was 1.0367) in the next few weeks.

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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