Euro Working Towards 1.3680
Commentary: The wave structure continues to favor the upside. Look for a new high, above 1.3637, in order to complete the third wave within a 5 wave rally from 1.3261. A 4th wave correction would be next and a 5th wave advance would complete the entire rally (above 1.3680). We’ll look for a reversal following the 5th wave completion.

Strategy: None

Japanese Yen Consolidates
Commentary: Although we have been looking for a decline to at least the 100% extension of 124.13-122.23/123.55 at 121.65, trendline support, drawn off of the April and June lows, has help up. The structure is bullish as long as price is above the 6/7 low of 120.75 and the decline from 123.96 is in 3 waves (corrective). Given the longer term measured objectives at 128.00, now is not the time to get bearish. A cautious bullish stance is warranted against 120.75. A rally through 123.55 would isntill confidence in the bullish outlook.

Strategy: Flat

British Pound Tests 2.0200
Commentary: The rally through 2.0131 has satisfied minimum upside expectations for the end of the ending diagonal that began at 1.8515 (the ending diagonal is the 5th wave within the larger 5 wave sequence from 1.7046). The upper resistance line for the diagonal is at 2.0321 today. Cable may push closer to this level but the reward to risk does not justify a bullish position. Still, looking at the short term intraday charts, the pair looks poised to make another high (above 2.0194) as the decline from there is in 3 waves. Daily RSI shows a quadruple divergence as well and RSI is above 70 so the big decline back towards 1.8500 is expected to begin within the next few days to week.

Strategy: Flat

Swiss Franc to Test 1.2250
Commentary: We continue to look lower. The dominant pattern is the 3 wave advance from 1.1993-1.2476, this suggests that 1.1993 will eventually be broken. Additionally, the decline since is impulsive. The decline can be counted as 5 waves down with an extended 5th wave. Near term, the USDCHF may work back towards 1.2341, which is defended by the 61.8% of 1.2476-1.2091 at 1.2329. Since we expect lower levels, we do not feel comfortable getting bullish for the expected countertrend rally.

Strategy: Flat

Canadian Dollar Trend Change
Commentary: The reversal with long term bullish implications is underway as there are 5 waves up from the 1.0470 low. We are showing the short term structure this morning. A complex correction (W-X-Y) appears to be playing out, meaning that 1.0526 will be broken before the next leg up. 1.0470 must remain intact for the structure to remain bullish.

Strategy: Bullish, against 1.0470, target TBD

Australian Dollar Digests Gains
Commentary: With the decline from .8596 corrective (so far), continue to look higher as long as price is above .8474. A measured objective for the end of the run is at the 161.8% extension of .8332-.8510/.8355 at .8643. A pop above .8596 may complete the 5th wave of the run from .8355. Similar to the EURUSD, we expect a new high to be short lived as a pullback in a larger 4th wave is expected.

Strategy: Flat

New Zealand Dollar Short Term Head and Shoulders
Commentary: We wrote last week that Kiwi could test “.7848-.8093 in the next couple of weeks (this is the 100%-161.8% of .7237-.7637/.7452).” The high today is at .7840 so the bull run may be complete. A 5 wave decline would confirm this but it is possible to count an ending diagonal from .7237 and channel resistance is at today’s high. These are the kind of patterns that lead to sharp reversals. Coming under .7791 signals additional bearish potential.

Strategy: Move to flat, bearish on break of .7791.

Jamie Saettele is a Technical Currency Analyst for FXCM.