EUR/USD – Our working assumption has been that a 5th wave (of a larger wave 1) down in a 5 wave sequence from 1.3367 began at 1.3043. The longer term bearish scenario is best served by one more low below 1.2865, which would complete the 5th wave and give way to a 3 wave correction higher before the next leg lower. A rally above 1.3001 would suggest that the 5th of 1 wave down was truncated (meaning that it failed to break below the wave 3 low) and that the 3 wave correction (wave 2) has already started. In this case, fibo resistance begins at the 38.2% of 1.3367-1.2865 at 1.3055 and extends to the 61.8% at 1.3174. Still, our bias is to the downside for a break below 1.2865 and a test of the 161.8% extension of 1.3367-1.3051/1.3296 at 1.2787 UNLESS 1.3001 resistance is broken.

USD/JPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern. A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38. We have a shorter term measured objective at 123.21, which is where the rally from 117.97 would equal the 114.42-119.67 rally. However, the rally above 121.78 makes it possible to count 5 waves up from 117.97 so the USDJPY may be close to a short term top.

GBP/USD – We maintain that weakness from 1.9915 is likely just the beginning of a much larger decline. Near term projected support is not until where the decline from 1.9736 equals the 1.9915-1.9645 decline. This is at 1.9461 (very close to the 1/9 high at 1.9455). In the EURUSD, price below 1.3001 keeps the near term bearish structure intact. The corresponding level in Cable is 1.9733 (if that is broken, then we’ll switch to an alternate wave count…which will be presented if price action requires). The 20 day SMA has held as support, with price bouncing off of the moving average on Friday and yesterday. A break below could be the trigger that bears are looking for.

USD/CHF – The USDCHF rally to above 1.2546 confirms that the decline to 1.2375 on 1/23 was the bottom of a corrective wave 4. The next bullish target remains the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746. 1.2422 is initial support and price above there warrants a bullish stance. Since there are 5 waves up from 1.1878, we must be cognizant of the possibility that a 3 wave correction lower could take place at any time. A decline below 1.2422 would strongly signal that the larger correction has started.

USD/CAD – The USDCAD continues to trade sideways at the top of its yearly range. The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883. 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927. The potential 2+ year bearish channel reinforces resistance at the current juncture. The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644. A decline below 1.1644 suggests that the decline has already started.

AUD/USD – The AUDUSD is little changed following the break below the neckline of the head and shoulders pattern. The 1/10 low at .7759 is the breakdown point and now resistance. Focus is now on the 11/13 low at .7614. There is still the possibility that this decline from .7936 is the C wave of a an A-B-C correction from .7979. In this case, .7714 would be where the A and C waves would be equal. A daily close above .7759 would give the latter scenario more weight.

NZD/USD – The 7 month trendline remains the pivot in Kiwi. That line is at .6920 today and increases 7 pips per day. Nothing has changed regarding the short term wave structure. The rally from .6840 to .7034 was most likely an a-b-c correction of the .7096-.6840 decline. We are looking for a decline to challenge .6778, which is where the decline from .7034 would equal the .7096-.6840 decline. This measured objective intersects with the 11/29 and 11/30 lows. Price below .7034 keeps this analysis intact.

Jamie Saettele is a Technical Currency Analyst for FXCM.