Euro In a 3rd Wave Higher
Commentary: As we have continued to focus on, “the 5 wave rally from 1.3261-1.3437 indicates that the larger trend is up unless 1.3261 is broken.” We were looking for a small wave c towards 1.3328, which is the 61.8% of 1.3261-1.3437 but a push through 1.3437 would suggest that wave iii up is underway. In this instance, an objective is 1.3656, the 161.8% extension of 1.3261-1.3437/1.3371.

Strategy: Bullish, against 1.3261, targeting 1.3656

Japanese Yen Stalling at 124.00
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, the USDJPY is likely to subdivide in a 5th wave before a correction. In other words, now is not the time to get bullish. Overbought and divergent RSI along with channel resistance indicate the potential for a pullback.

Strategy: Move to flat, we’ll look to return to the bull side on a correction of the 5 wave rally from 120.75.

British Pound To Test 2.0000
Commentary: From yesterday “look for weakness/consolidation for the rest of the New York session before the 5th wave rally begins (which should exceed 1.9947).” Cable has thrust higher in a 5th wave which is likely to subdivide higher. Potential resistance is at the 161.8% extension of 1.9883-1.9939/1.9910 at 2.0001 and where wave 5 (beginning at 1.9883) would equal wave 1 (1.9621-1.9780) at 2.0042.

Strategy: None

Swiss Franc Challenging 1.2300
Commentary: We wrote yesterday that “the final leg of the correction is likely to play out the rest of the week towards the 61.8% of 1.2145-1.2476 (1.2271).” The USDCHF is tracking our count and there is no change. Potential support is at the confluence of the 50% of 1.2145-1.2476 / 100% extension of 1.2476-1.2353/1.2424 at 1.2301/11.

Strategy: Look to get bullish near 1.2271, against 1.2145, targeting a break above 1.2476.

Canadian Dollar Towards Channel Line
Commentary: The rally through 1.0750 negates the idea that a doublezig correction is complete. Price is approaching potential channel resistance, near 1.0800 today. We are looking for this correction to continue towards the channel resistance before a 5th wave decline brings the USDCAD below 1.0548.

Strategy: None

Australian Dollar Bullish Channel
Commentary: A bullish may be forming. Channel support is at .8460 and channel resistance is near .8540. The dominant pattern on the daily is the 3 wave setback from .8390 to .8162, which is bullish. Rallies since have unfolded in an impulsive manner. The channel offers the best reference points from which to trade.

Strategy: None

New Zealand Dollar Little Changed
Commentary: There is no change from yesterday as Kiwi continues to confuse. “The 5 wave decline from .7637 to .7465 suggested to us that at least another 5 wave decline was going to occur with .7637 remaining intact. This could still happen but with Kiwi pressing up against .7600, our confidence in the bear side is low. We do not have a strong opinion on NSDUSD at the moment as the rally from .7452 is sloppy so we are looking at the daily chart for perspective. Watch the resistance line drawn off of the May 2006, April 2007, and June 2007 highs for a potential reversal. If the pattern clears up, then we will write about here.”

Strategy: None

Jamie Saettele is a Technical Currency Analyst for FXCM.