Euro Bullish Above 1.3437
Commentary: We wrote yesterday that “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.” The 4th wave correction is playing out now. Look for support near the 38.2% of 1.3371-1.3659 at 1.3549. The structure is bullish above 1.3437.

Strategy: None

Japanese Yen Channel Holds
Commentary: “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.” Trendline support has held and 122.09 is now key to the bullish case.

Strategy: Flat

British Pound Daily RSI Divergence
Commentary: See yesterday’s analysis for the daily chart and longer term outlook. Today we are focusing on the short term chart (60 min) because Cable may be at a turning point. The rally from 1.9621 is in 5 waves and possibly complete. An initial 5 wave decline from the top (2.0203) would signal the reversal and a bearish opportunity. That decline may be underway now. Given the quadruple RSI divergence on the daily that we pointed out yesterday, a cautious bearish stance is warranted against 2.0203.

Strategy: Flat

Swiss Franc Digests Gains
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.

Strategy: Flat

Canadian Dollar Tight Range
Commentary: The reversal with long term bullish implications is underway as there are 5 waves up from the 1.0470 low. The ‘5 up’ is the dominant pattern. The pair has traded sideways since in what appears to be a triangle. A rally through 1.0656 would signal the resumption of the newly established uptrend. 1.0470 is critical to the bullish case.

Strategy: Bullish, against 1.0470, target TBD

Australian Dollar Trendline Support at .8400
Commentary: We wrote yesterday that “a pop above .8596 may complete the 5th wave of the run from .8355.” A spike to .8608 appears to have completed that small degree 5th wave today. The short term pattern is not too clear but the decline unfolding now may be a larger 4th wave. The structure is bullish as long as price is above .8355. Potential trendline support rests near .8400.

Strategy: Flat

New Zealand Dollar Rejected Prior to .7900
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 NZDUSD hit .7879 today, which is in the center of our ‘reversal zone’, so a top may be in. As always, only a 5 wave decline would signal with confidence that a top is in. We are watching this pair closely over the next few days – looking for an opportunity to get short. Daily RSI is at 75 and divergent (slightly) with the recent high.

Strategy: Flat

Jamie Saettele is a Technical Currency Analyst for FXCM.