Euro Decline to Accelerate

Tue, 29 Sep 2009 10:06:30 -0400

By Jamie Saettele, Senior Currency Strategist

The EURUSD is testing short term channel support, which is not expected to hold. The next level of interest would be 1.4450. Today's view is of short term charts.


Euro / US Dollar


The EURUSD is testing short term channel support.  A daily close below the line would increase confidence in the bearish bias and expose 1.4450.  Price should stay below 1.4650 at this point.

British Pound / US Dollar


Former support is now potential resistance in the 1.6110/65 zone (1.6050 is also potential resistance).  Watch for resistance at the top of a potential channel as well (drawn a line across recent lows and extend a parallel from the 9/23 high in order to construct this line). 

Australian Dollar / US Dollar


The AUDUSD has been treading water since trading at .8797 on 9/23.  After breaking a short term channel, price has traded back towards the top of the range and the underside of the former support line.  Trading to a new high would expose .9032 (78.6% retracement).  It is worth noting that the rally from .6245 is exactly double the size (in price) as the .6005-.7275 advance (see yesterday’s daily chart).  A and C waves sometimes relate to each other by factors of .618, 1, 1.618 or 2.

New Zealand Dollar / US Dollar


The NZDUSD is similar to the AUDUSD in that price action since its 2009 high as been choppy.  The topline of a channel since July and the midline of a channel since March rejected the NZDUSD advance.  Last night’s high is now the risk level for bears and an initial target is .6900.

US Dollar / Japanese Yen


The USDJPY has reached former support, which is 90.10/34.  While the trend is bearish below 91.65, the strength of the rally from channel support warrants consideration that a more important low is in place.  Trading above the short term resistance line extended from the 9/21 and 9/24 highs would be a sign that something more constructive is taking place.

US Dollar / Canadian Dollar


Maintain a bullish bias above 1.0650.  The rally from 1.0588 could be a series of 1st and 2nd waves.  This count is extremely bullish and gives scope to an extended rally from current price.

US Dollar / Swiss Franc


The USDCHF doesn’t have the reversal characteristics of the other USD pairs (EURUSD and NZDUSD reversing from channels, AUDUSD breaking channel support, GBPUSD large h&s, USDCAD short term h&s) but the wave count warns (and has been warning) of a significant low.  Trading through the top of short term channel resistance would be a sign that a low is in place.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday mornings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates.  He is the author of Sentiment in the Forex Market.  Follow his intraday market commentary at DailyFX Forex Stream. 

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