The USDJPY is closing in on the double bottom 87.10 level. That level is expected to be taken out eventually. The EURUSD is consolidating ahead of the December 2008 high (1.4720) in what may be a triangle.

Euro / US Dollar

Longer term - The EURUSD should continue to work higher and push through the December 2008 high in order to complete the entire rally from the October 2008 low. 1.4850 (100% extension of 1.2327-1.4850) is a potential target. The line extended from the March and June highs is also a potential target - that line is at 1.5100 this week and increases about 60 pips a week. Barring a drop below the support line drawn off of the April, August, and September lows, the trend is up to the mentioned levels.

Short term - A small 4th wave retracement may be complete at 1.45. It is possible that a triangle is unfolding as well. In this case, additional chop would carry on until early next week prior to the run upwards of 1.50.

British Pound / US Dollar

The GBPUSD may be working higher to form the right shoulder of a head and shoulders top. The left shoulder's price extreme was 1.6750 - and has been reached today. Potential resistance is also just above 1.69 (parallel extension of potential neckline from top of potential right shoulder). The h&s is pure speculation at this point. Until a clear 5 down is visible, it is dangerous to be short.

Australian Dollar / US Dollar

The next AUDUSD objective is .9032 (78.6% of .9856-.6005). Similar to the EURUSD, a support line (channel support in this case) defines the trend. Former resistance at .8484 is potential support on a drop below .8541.

New Zealand Dollar / US Dollar

A NZDUSD objective is .7250. This is where the rally from .6193 would be equal to 61.8% of the .4890-.6601 rally. Again, channel support defines the trend and a short term support zone is .6900/30. MACD is an interesting development. The indicator itself appears to be forming a head and shoulders (divergence) - which warns of a reversal in the weeks ahead. Above .6920 keeps the NZDUSD uptrend strong.

US Dollar / Japanese Yen

Keep the long term outlook in perspective - a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80). The rally earlier this year met former support and rolled over - which increases confidence in the bearish bias. At this point, risk on shorts can be moved to 92.63. I wrote yesterday that the decline may begin to accelerate as support has been breached (91.73) and price remains confined to a well-contained channel. The drop has picked up and bears are targeting 87.10.

US Dollar / Canadian Dollar

Barring a break above the resistance line, the USDCAD is vulnerable to a drop towards 1.0330 - which has been both support and resistance over the last several years. This level is also the 61.8% of .9055-1.3068. Given the level of pessimism with regards to the US dollar - it is important to present the bullish count in which the rally from 1.0631 and decline from 1.1130 composes the first 2 waves of a bull move (either a 3 wave or 5 wave advance). Keep this in mind.

US Dollar / Swiss Franc

As mentioned yesterday, the print below 1.0367 (December 2008 low) meets the minimum requirements for wave v of C. An objective is 1.0037 (100% extension).

British Pound / Japanese Yen

There are several indications that the rally from 118.79 is complete such as the break of trendline support in July and the potential double top near 163.00. Also, a head and shoulders top may be forming. Even if one is forming, a rally is expected to form the right shoulder. Potential resistance, from Fibonacci and former resistance, is 157.72. Near term, head and shoulders bottom may be forming. The left shoulder was complex and the right is proving to be as well. 150.00/151.00 is support.

Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses on Monday (Euro and Yen crosses), and Intraday Forex Trading Strategy as market action dictates. 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