EUR/USD â�,�“ We wanted to step back from the shorter term price action this morning and analyze the bigger picture.  It appeared for a while that the rally from 1.2456 was going to exceed 1.2976 to complete a 5 wave uptrend from 1.1640.  However, the repeated failure of EURUSD at and just above the 1.2900 figure gives credence to the head and shoulders formation that began in early 2004.  22 day momentum (1 month) turned negative on 9/5 at 1.2815 and price has remained below the 66 day SMA (3 month SMA) since 9/8 (on a closing basis).  Also, a trendline drawn from the 2/27 close that connects the 7/20 and 9/7 closes was broken on 9/8 (this line is on the chart below).  A break below 1.2647 exposes the next major support at 1.2456.  Bulls will look to test the 9/6 and 9/7 highs at 1.2830/32.  With ATR historically low and daily Bollinger bands tight, the probability for a breakout remains high.

USD/JPY â�,�“ We have maintained a bullish tone against the â�,��"support zone from the 38.2% of 115.55-118.14 / 9/12 low at 117.15/36.â�,�  The last two dayâ�,��"�s lows at 117.33 and 117.29 (and 117.33 today) serve to confirm the forecasted support.  However, bulls should be warned of short term resistance from 117.75/77 (9/11, 9/14 and 9/15 highs).  A push above there targets 118.14.  A break below the 117.29 low may see the pair offered until the 9/7 high at 117.05.  The pair maintains a bid tone as evidenced by this monthâ�,��"�s high exceeding the July high of 117.88.

GBP/USD â�,�“ The GBPUSD retraced 61.8% of its 1.9091-1.8602 decline to just above the 1.8900 figure yesterday.  The advance was in 3 waves as well, which suggests that it was a correction and that lower prices lie ahead.  The pair is at a short term trendline from the 9/11 low at 1.8602 right now and a break below there would reinforce a bearish interpretation of recent price action.  The 9/14 high at 1.8918 is resistance and a break higher would suggest a deeper retracement of the move down to possibly the 78.6% fibo at 1.8985.

USD/CHF â�,�“ We wrote yesterday that â�,��"The pair may be making its way towards 1.2426â�,�¦the 5 wave uptrend from 1.2227 suggests that this move lower is corrective and that Fibonacci supports should hold.â�,�  Fibonacci support did indeed hold as the pair bottomed yesterday at 1.2433 and has since skyrocketed to above 1.2550.  The pair is rapidly approaching the 7/19 high at 1.2595.  This is a â�,��"make or breakâ�,� point of reference.  Breakout potential exists as the Bollinger bands (daily) are widening from very tight levels.  Reinforcing the bullish view is the break above the 132 day (6 month) SMA on 9/12.  Price had remained below the 6 month moving average since 4/11/2006.  A break above 1.2595 targets the 4/21 high at 1.2822.  The 9/11 low at 1.2393 is support.

USD/CAD â�,�“ From yesterday â�,�“ â�,��"We still favor the upside over the longer term but the inability of the pair to break above 1.1226 the last two days suggests that we may see a deeper retracement.â�,�  The pair dipped to 1.1114, just above the 61.8% of 1.1028-1.1235 at 1.1107 yesterday.  The proximity of that Fibonacci level along with the convincing bounce higher favors a test of 1.1235 (as long as 1.1114 holds).  22 day (1 month) momentum is right at 0 and is close to reaching positive territory for the first time in over a month.  A break above 1.1235 exposes the 8/15 high at 1.1319.  If 1.1114 fails, then a deeper correction towards the 78.6% fibo of 1.1028-1.1235 at 1.1072 may be taking place.

AUD/USD â�,�“ Fibonacci support from the 38.2% of .7721-.7481 at .7573 has held as yesterdayâ�,��"�s high printed at .7568.  This is also former support from the 8/9 low at .7563.  We have maintained a bearish view for a while primarily because of IMM futures data but moving averages are lining up now and reinforcing our view.  The 2 week SMA has moved below the 1 month SMA and price is currently below the 3 month SMA (which is at .7542).  The 6 month SMA is at .7488 along with the 9/13 low at .7481.  A break below that confluence of support could trigger additional selling.  The next bearish target would be the 7/19 low at .7403.  Resistance remains yesterdayâ�,��"�s high at .7568.  A push higher negates the immediate bearish view and suggests that a deeper correction of weakness is taking place â�,�“ possible towards the 61.8% fibo of .7721-.7481 at .7629.

NZD/USD â�,�“ Kiwi has come off of its high from yesterday (.6651) but has yet to test significant support â�,�“ which begins at the confluence of the 38.2% of .6341-.6651 / intraday support at .6533.  Strength looks overextended as daily oscillators all exhibit bearish divergence with price.  This would seem to limit additional gains but a push through .6651 would target the confluence of the 50% fibo of .7461-.5927 / 7/8/2005 low at .6683/93.  A break below the mentioned .6533 level would begin to imply that lower prices lie ahead.  In this case, support would be at the 61.8% of .6341-.6651 at  .6460.

Jamie Saettele is a Technical Currency Analyst for FXCM.