EUR/USD ââ,¬â€œ EURUSD bids were triggered just below the 38.2% fibo of 1.2761-1.3367 at 1.3136 and the decline from 1.3367 is in 3 waves and thus corrective in nature.  We focused last week on the possibility of a corrective decline that would be followed by one more rally (to above 1.3367) to complete the 5 wave bullish sequence from 1.2483.  Still, downside risk outweighs upside risk at this point.  Daily oscillators favor a deeper decline with RSI crossing below 70 and CCI crossing below 100.

USD/JPY ââ,¬â€œ The USDJPY has rallied to the 50% of 119.87-114.42 at 117.14, just below a resisting trendline drawn off of the 10/24 and 11/17 highs.  The pattern since the 12/5/2005 high at 121.38 has taken on the form of an inverse head and shoulders pattern.  However, a rally through the neckline is required to complete the pattern.  The neckline is drawn off of the 12/5/2005 and 10/13/2005 highs and is near 119.60 today (decreases about 2 pips per day).  Resistance prior to the neckline is at the 78.6% of 119.87-114.42 at 117.78.  Support stems from the 11/30 high at 116.54.

GBP/USD ââ,¬â€œ Cable is in the same position as the EURUSD.  That is, the decline from 1.9846 to 1.9464 (the 38.2% of 1.8834-1.9846 is at 1.9460) is likely the 4th wave of the larger 5th wave.  What follows then is the 5th of the 5th, which likely exceeds 1.9846 before a much more pronounced decline takes place.  Fridayââ,¬â"¢s high at 1.9726 is initial resistance.  A drop below 1.9464 suggests a larger correction is in the works and focus would then shift to the 50% of 1.8834-1.9846 at 1.9339.

USD/CHF ââ,¬â€œ The USDCHF has worked higher but failed prior to the 11/29 high at 1.2116 yesterday.  Wave structure is the same as that of the EURUSD and GBPUSD, albeit in the opposite direction.  1.2116 remains resistance and a 5th wave decline would challenge the 12/5 low at 1.1878 and expose the 4/21/2005 low at 1.1739.

USD/CAD ââ,¬â€œ The USDCAD is currently testing resistance from the 4/13 high at 1.1533.  Price above the support line drawn off of the 9/1 and 10/30 highs keeps the bias a bullish one.  A line parallel to the support line and extended from the 8/18 high at 1.1271 places trendline resistance just above current price.  However, daily oscillators are increasing and not yet overbought ââ,¬â€œ suggesting that strength could very well persist.  Significant resistance is not until the 4/3 high at 1.1771.

AUD/USD ââ,¬â€œ After taking out the 12/1 high at .7921 on Friday, the AUDUSD declined to near the .7800 figure yesterday.  The short term double top at .7921/29 along with bearish divergence (daily oscillators) and daily oscillators declining from overbought levels all give scope to further weakness in the Aussie.  A decline below .7811 shifts focus to the 11/1 high at .7766. 

NZD/USD ââ,¬â€œ The Kiwi has clustered near the 61.8% of .7463-.5927 between .6814 and .6939.  While RSI has declined from above 70 on the daily, the uptrend remains in place above the trendline drawn off of the 6/28 and 11/15 lows.  That line is at .6694 today and increases about 4 pips per day.

Jamie Saettele is a Technical Currency Analyst for FXCM.