Euro Tests Former Trendline
Commentary: The bounce from 1.3261 has stalled just below the 61.8% of 1.3552-1.3261 at 1.3441. The 21 day SMA at 1.3418 has also held as resistance. Two weeks ago, the EURUSD broke below a support line drawn off of the October 2006 and January 2007 lows. The pair has come back to test the other side of the line as resistance. The longer term bearish bias is intact as long as price remains below 1.3552.

Strategy: Bearish on a break below 1.3261

Japanese Yen Digests Losses
Commentary: “It is our working assumption that the USDJPY is working higher in a C wave towards the 128.00 area over the next few weeks/month. The 78.6% of 135.13-101.67, the 100% extension of 108.98-122.17/115.14, and the 100% extension of 101.67-121.39/108.98 are between 127.97 and 128.70.” Near term, 122.82-123.30 should provide solid support.

Strategy: Looking to align with bull trend between 122.82 and 123.30

British Pound to 1.9900?
Commentary: Cable’s rally looks impusive and the next level of resistance is 1.9891/1.9912. This is the 78.6% of 1.9964-1.9621 / 161.8% extension of 1.9621-1.9780/1.9655. Coming under 1.9780 would signal that bears are back in control. As long as price is below 1.9964, the longer term turn bearish bias is intact.

Strategy: Bearish now, against 1.9964, target TBD

Swiss Franc In Correction
Commentary: The USDCHF reversed last week just before the 100% of 1.1993-1.2329/1.2145 at 1.2481. We wrote last week that “since the USDCHF has stalled just below the 100% extension (1.2481), be wary of a pullback towards. A small c wave is expected to bring price back to the former 4th wave at 1.2372. This is a good point to either add to longs or initiate longs.” The USDCHF may have more downside potential than initially thought. Additional support is at 1.2350 and 1.2311 (38.2%-50% of 1.2145-1.2476).

Strategy: Move to flat (previously bullish)

Canadian Dollar Fluctuates Around 1.0700
Commentary: We still maintain that “the 4th wave correction of the 1.1825-1.0548 decline is underway. The projected end for wave 4 is 1.0849-1.1036. 1.0849 seems more likely since that level intersects with channel resistance this week.” Friday’s low at 1.0601 is the bottom of wave b within the larger wave 4.

Strategy: Bullish, against 1.0548, targeting 1.0800

Australian Dollar Bullish Above .8396
Commentary: Our assumption is that a correction ended at .8332, which is the 100% extension of .8476-.8365/.8447. We wrote last week that “once we see evidence of an impulse rally, we will get bullish against the swing low (which is .8332 now). A rally through .8447 warrants bullish action.” The rally fom last week’s low is is impulsive, and strongly indicates that at least one more 5 wave rally is expected with .8332 remaining intact. We are keeping risk confined to .8396 (which is the low of wave ii).

Strategy: Bullish now, against .8396 target TBD

New Zealand Dollar Rally Has Been Choppy
Commentary: Our assumption is that a correction ended at .8332, which is the 100% extension of .8476-.8365/.8447. We wrote last week that “once we see evidence of an impulse rally, we will get bullish against the swing low (which is .8332 now). A rally through .8447 warrants bullish action.” The rally fom last week’s low is is impulsive, and strongly indicates that at least one more 5 wave rally is expected with .8332 remaining intact. We are keeping risk confined to .8396 (which is the low of wave ii).

Strategy: Bullish now, against .8396 target TBD

Jamie Saettele is a Technical Currency Analyst for FXCM.