Euro Close to a Top
Commentary: Wave 5 within the 5 wave rally that began at 1.3261 is close to an end. The pair is pressing up against the resistance line drawn off of the 6/19 and 7/2 highs. In the very short term, the pair is tracing out a small wave 4 (within larger wave 5). The 5th of the 5th should exceed 1.3786, if only slightly, before a reversal.

Strategy: Move to flat (from bullish)

Japanese Yen 5 Wave Impulse
Commentary: We wrote yesterday that “longs should be careful as sentiment is ripe for a top”. The USDJPY has plummeted so we are looking to the short term structure to find out what we can expect. The decline from 123.66 is currently in the 4th wave position, therefore we expect a drop below 120.97 in the 5th wave before another correction higher. A short term target for bears os the 161.8% extension of 124.13-122.09/123.66 at 120.37.

Strategy: Remain bearish, against 123.66, target TBD

British Pound Hits Resistance Line - Forming a Top
Commentary: There is no sign yet of a reversal but the long term structure indicates reversal potential. Price has touched the resistance line from the ending diagonal. A terminal thrust through the line is possible but strength should prove temporary. We expect a reversal, and soon. We are looking for a return to 1.8515 (time horizon unclear).

Strategy: Flat

Swiss Franc Uptrend (USDCHF Down) Confirmed
Commentary: The USDCHF decline is back underway, as evidenced by the ‘5 down’ from 1.2232 to 1.1920. Look for a period of consolidation/correction to play out in 3 waves. Our count on the daily has price declining below 1.1877 before any meaningful rally attempt takes place. The USDCHF is bearish below 1.2232 although price is unlikely to come near here).

Strategy: Bearish, against 1.2232, target TBD

Canadian Dollar Testing 1.0600
Commentary: The reversal that we have been expecting is underway. A bullish bias is warranted as long as price is above 1.0476. See yesterday’s analysis with the weekly chart to see why we think this rally is the real deal. We are looking for much higher prices over the next few months. A rally through 1.0756 would instill confidence in the bull side.

Strategy: Flat

Australian Dollar Pressing Against Resistance Line
Commentary: There is not much to add regarding the AUDUSD. The pair is right at potential trendline resistance drawn off of the August 2006 and April 2007 highs. This line and bearish divergence with RSI on the daily make getting bullish now a risky proposition. Getting bearish is difficult because there is no sign yet that the pair has reversed. We think that the best opportunity is to wait for a corrective decline to unfold before getting bullish for a run at a new high in a 5th wave.

Strategy: Flat

New Zealand Dollar .7690 Bearish Pivot
Commentary: See Monday’s commentary for why we see potential for a longer term top to form. Kiwi has declined but the decline is corrective so far. Coming under .7690 and then the potential support line drawn off of the March and May lows would instill confidence in the longer term bearish outlook. The count remains bullish until that happens, as an impulse may be unfolding from .7452.

Strategy: Move to flat

Jamie Saettele is a Technical Currency Analyst for FXCM.