EUR/USD ââ,¬â€œ The EURUSD continues to slip but deeply oversold conditions warrant a rally attempt.  The dip this morning to 1.2952 looks like a B wave in the 3 wave correction that is taking place.  This sets the stage for a rally attempt towards the wave 4 extreme at 1.3104.  RSI divergence (and RSI increasing from below 30) on the 240 minute chart favors the outlook for a stronger EURUSD in the short term.

USD/JPY ââ,¬â€œ The USDJPY rally has turned down before 119.67.  The rally from 117.97 to 119.53 is the B wave of the 3 wave correction that is taking place following the rally to 119.67.  What we can expect then is a C wave down that is roughly equal to the A wave decline of 119.67-117.97.  A decline from 119.53 would equal the A wave at 117.83.  

GBP/USD ââ,¬â€œ Cable is far more constructive than the EURUSD.  The rally from 1.9260 to 1.9455 is in 5 waves and the dip to 1.9341 in 3.  The pair has turned up in what is either a 3 or a C wave that should challenge 1.9536 (which is where the price distance from 1.9341 would equal the 1.9260-1.9455 rally).  The 61.8% of 1.9749-1.9260 at 1.9562 reinforces resistance there.  1.9260 needs to hold for the bullish construction to remain (ideallyââ,¬Â¦.1.9341 holds).

USD/CHF ââ,¬â€œ The wave pattern is not as clear regarding with the USDCHF but other technical indications favor weakness, if only for a correction.  The rally from 1.1878 stalled at the 61.8% of 1.2768-1.1878 today (1.2427).  On the 240 minute chart, divergent RSI is rolling over from above 70.  Fibo support begins at the 38.2% of 1.2110-1.2446 at 1.2318.  The pair did close above the 200 day SMA yesterday for the first time since late October but there is often whipsaw type action around the 200 day SMA before a trend is in place.  Expect the pair to cross the long term moving average multiple times within the next few weeks.

USD/CAD ââ,¬â€œ The USDCAD rally continues to mark time as the pair has stalled near the April 2006 high of 1.1771.  Since 01/05, the pair has traced out a small triangle.  Triangles usually end in a thrust in the direction of the trend (in this caseââ,¬Â¦up) but the move is a terminal event.  Thus, a thrust higher (if it happens) eventually should give way to a turn lower.  A break below 1.1719 suggests that a turn lower is already in the works.

AUD/USD ââ,¬â€œ The AUDUSD has stabilized at support from the 12/15 low at .7778 ââ,¬â€œ yesterdayââ,¬â"¢s low is .7780.  240 minute RSI has increased from below 30 (oversold), suggesting that the near term could see a bounce towards resistance which begins at the 01/05 high at .7850 (38.2% of .7979-.7780 is at .7856).  A daily close below .7778 would bolster the bearish case and give scope to the 50% fibo of .7413-.7979 at .7696.

NZD/USD ââ,¬â€œ Kiwi ââ,¬Ëœs looks constructive as the rally from the .6840 low to .6938 is most likely wave A and the decline to .6880 is wave B.  The turn up this morning occurred just before the 61.8% of .6840-.6938 (which is at .6878).  Wave B retracing 61.8% of wave A is typical of a zigzag pattern.  If a zigzag is unfolding, then Kiwi strength should persist until at least wave C equals wave A ââ,¬â€œ which in this case would be .6978.  This level is in-between the 50% and 61.8% retracements of .7096-.6840 (.6968-.6998).

Jamie Saettele is a Technical Currency Analyst for FXCM.