Euro Consolidates Near Top of Range
Tue, 25 Aug 2009 11:06:04 -0400
By Jamie Saettele, Senior Currency Strategist strategist@dailyfx.com

The EURUSD is near the top of its mutli-month range. In this position, there is possibility of a breakout in which case bulls would target the December 2008 high of 1.4720. 1.4170-1.4200 is potential support.

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Euro / US Dollar

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The EURUSD is threatening to break higher and test the December 2008 high of 1.4723. A potential target is 1.5245, which is the 78.6% retracement of the decline from above 1.6000. This level intersects with potential trendline resistance at the end of September. Focus remains on the short term advance from 1.4044, which is in 5 waves. It is possible that a correction is complete at 1.4252 (38.2% of the rally) but a larger more complex correction could end below that level - which would expose the 1.4170-1.4200 zone.

British Pound / US Dollar

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The GBPUSD could be in the latter stages of an ending diagonal (from 1.5800). Only a drop below 1.5980 would suggest that the larger trend has rolled over. Until then, a rally to a fresh 2009 high is possible in wave v to complete the diagonal. Looking out further, targets in the event of a breakout are round number resistance at 1.7500 and Fibonacci resistance at 1.8238 (intersects with potential trendline resistance at the end of September).

Australian Dollar / US Dollar

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As the AUDUSD nears its 2009 high, the bearish short term pattern is called into question. Potential for a breakout exists as long as the AUDUSD is above .8151. A potential target is the 78.6% of the decline from .9856, just above .9000. This level intersects potential trendline resistance on the same day that the EURUSD resistance line intersects its 78.6% retracement (end of September).

New Zealand Dollar / US Dollar

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As long as the NZDUSD is within the well defined upward sloping channel, calling for a top is a dangerous. The pair is now pressing against its 2009 high and looks poised to make new highs. A blow-off top looks likely and potential topping areas are .7250 (61.8% extension of .4890-.6601/.6193) and .7507 (78.6% retracement of decline from .8219).

US Dollar / Japanese Yen

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After a false break through channel resistance, the USDJPY is back below both the 55 and 200 day moving averages. The pair has failed at the 38.2% of the decline from 97.81 and Fibonacci resistance extends to 96.13. I like the idea of selling rallies with stops above 97.81.

US Dollar / Canadian Dollar

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The USDCAD rally from 1.0631 is in 3 waves. The form suggests that the trend remains down. A break to a new low would expose a Fibonacci extension at 1.0317, the 78.6% retracement at .9914 and the 100% extension of the 1.3068-1.0782 decline at .9444. This level intersects a potential channel line at the end of September. 1.0950 is resistance.

US Dollar / Swiss Franc

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Failure to stay above 1.0561 suggests that the USDCHF is headed for a test of the December 2008 low at 1.0367. Dropping below there would possibly complete a 3 wave drop from 1.2303. A target is near parity (1.0037 is the 100% extension). 1.0690 is potential resistance.

British Pound / Japanese Yen

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A support line is giving way and a break below the daily lows near 153.50 would expose the July low below 147.00. The short term bearish bias is against yesterday’s high of 156.80.

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) and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream. Contact Jamie at jsaettele@dailyfx.com

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