EUR/USD – The EURUSD has held at former triangle resistance, which has now become support.  Price has yet to challenge fibo resistance, which begins at the 38.2% of 1.3296-1.2865 at 1.3029.  We maintain that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 strongly favors that a major turn has occurred.  A break below 1.2865 targets the next bearish target at 1.2708 (38.2% of 1.1640-1.3367).  The 12/18 low at 1.3051 is in-between the 38.2% and 50% fibos of 1.3296-1.2965 (1.3029-1.3080).  This area should be solid resistance.

USD/JPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern.  A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38.  In the short term, the pair may be heading lower.  With 5 waves up from 117.97, a pullback towards fibo support is reasonable.  The 38.2% of 117.97-120.87 is at 119.76.  Daily RSI has declined below 70 as well. 

GBP/USD – We focused last week on how much more constructive Cable was compared to the EURUSD.  The pair has turned up in what looks like an extended 3rd of the 5th wave to complete the bullish sequence from 1.8515 (and the bullish sequence of one larger degree from 1.7046).  Thus, price is expected to exceed 1.9846 before a major correction takes place.  In the short term, the extended third wave is nearing resistance from a line drawn off of the 12/1 high (1.9846) and 1/3 high (1.9749).  Also, the extended 3rd wave will sport 5 waves of its own on a rally through 1.9702.  In short, downside risk appears to outweigh upside risk at this point.

USD/CHF – The USDCHF has turned down from very close to where the 1.2110-1.2526 advance would equal the 1.1878-1.2271 advance.  Equal legs are indicative of corrections and the proximity of 1.2526 skews risk to the downside.  If 1.2526 is exceeded this week, then the impulsive numbered count would be preferred and focus would switch to the 138.2% and 161.8% extensions of 1.1878-1.2271 / 1.2110 at 1.2653/1.2746.  Initial support is at the 38.2% of 1.2110-1.2526 at 1.2369.  Daily CCI has rolled over from above 100 on the daily.  This often occurs prior to a decline. 

USD/CAD – The USDCAD may have turned down last week from a wave 4 correction last week.  Thus, a wave 5 may have started which would ultimately serve to complete the long term downtrend.  Daily RSI has turned over from above 70 – which is a strong reversal signal.  The high last week at 1.1800 is critical for the immediate bearish case.  A rally through 1.1800 negates the immediate bearish outlook and gives scope to the 161.8% extension of 1.0927-1.1456 / 1.1028 at 1.1885.  1.1885 intersects with a bearish channel line.

AUD/USD – Last week’s commentary still stands – “The AUDUSD closed below the all-important .7778 (12/15 low) but the break lower proved false as the pair has rallied today to take out the previous two day’s highs.  Bullish pivots to watch are .7878 (12/20) high, .7929 (12/8 high) and ultimately .7979 (01/03 high).  False breakouts often lead to dramatic reversals in the other direction, which is what we may see here.  .7759 (yesterday’s low) is critical support for the bullish case.”  The pair is also back above the 20 day SMA today.  A close above would bolster the bullish argument.

NZD/USD – The Kiwi rally failing at the 50% fibo of .7096-.6840 at .6974 yesterday along with yesterday’s outside day favors an extension of weakness.  A break below .6840 shifts focus to .6718.  This is where the decline from .6974 would equal the .7096-.6840 decline.  Price action at that level would be telling of the larger trend.  If price falls through .6718 by a wide margin, then the likelihood that a major top is in place at .7096 increases.  A strong bounce from near .6718 gives scope to one more rally through .7096.

Jamie Saettele is a Technical Currency Analyst for FXCM.