EUR/JPY

Commentary – The rally from 162.16 is the beginning of a 5th wave that will lead to a major reversal in coming weeks. A projection for the end of wave 5 (and the entire rally from 150.73 for that matter) is where wave 5 would equal wave 1 – at 166.02. Bearish divergence with daily and weekly (and overbought) oscillators warn that the rally is tired. On a larger scale, the COT reports that speculators are extremely long Euros and extremely short Yen – in other words, conditions are ripe for a reversal. In summary, we are looking for signs of a reversal, but this rally could carry to 166.00 before that happens. The weekly chart is above.

Strategy – None

EUR/CHF

Commentary – The EUR/CHF is similar to the EUR/JPY in that 5 waves up are are close to complete. We wrote last week that “we can expect a choppy move higher before a reversal. Watch the channel forming since April 12th (below on chart). The EUR/CHF will likely reverse near the top side of this channel.” The EUR/CHF has reversed from the top of the channel but this decline is probably just a 4th wave decline that has bottomed. The 5th wave higher is underway now to complete the ending diagonal. A measured objective for the end of the advance is where wave 1 will equal wave 5 at 1.6675.

Strategy – Bullish against 1.6475 targeting 1.6613

EUR/GBP

Commentary – The 5 wave rally from .6535 to .6867 (late January-early March) indicates that the larger trend is bullish but the next leg up has not started yet. A larger flat correction appears to be unfolding from .6867. The C leg of the correction would equal the A leg at .6737. We are looking for a bottom near there.

Strategy – None

Jamie Saettele is a Technical Currency Analyst for FXCM.