Euro Reverses Ending Diagonal
Commentary: We wrote yesterday that “the two near term moves that we view as having the highest probabilities are, 1.) that an ending diagonal is unfolding from 1.3752…the EURUSD will spike through the 1.3843 before reversing and trading to at least 1.3752.” The EURUSD spiked to 1.3852 before reversing and trading to 1.3724 this morning. Price has fully retraced the ending diagonal and found support, which gives scope to a continuation of the uptrend in wave 5.

Strategy: Flat

Japanese Yen Towards 119.45
Commentary: We wrote yesterday that “From an EW standpoint, a double zigzag may be unfolding from 124.13. The first a-b-c decline (wave W) is from 124.13-120.97. Wave X is from 120.97-122.60 and wave Y is underway now (will either be an a-b-c or i-ii-iii-iv-v). Waves W and Y would be equal at 119.45, very close to the mentioned 50% fibo at 116.64 and 1 pip away from the 5/11 low at 119.46. We are looking for a decline to this level.” The USDJPY was close to the measured objective, hitting 119.81 this morning. There is no sign yet that a bottom is in place so we are looking for price to continue lower towards 119.45.

Strategy: Flat

British Pound 4th Wave Correction
Commentary: Our highest probability count has Cable tracing out a 4th wave correction within the larger 5 wave rally from 1.9621. We are looking for a bit more weakness, towards the former 4th wave (one lesser degree), at 2.0459. Parallel channel support is close right at this level as well (shown on chart). The bigger picture is bullish as long as price is above 2.0203.

Strategy: Currently bearish, look to flip close to trendline on chart above, against 2.0203, targeting 2.1000

Swiss Franc Complex Correction
Commentary: The USDCHF broke through 1.2079 to test 1.2142 this morning. The structure of the decline from 1.2476 is not completely clear but potential resistance is at the 38.2% of 1.2476-1.1960 at 1.2157. A complex correction appears to be playing out from 1.1960. The final leg of the correction (from 1.2011) needs a push above 1.2142 before we can consider the advance complete.

Strategy: Flat

Canadian Dollar Multi-Decade High (USD/CAD Low)
Commentary: The USDCAD broke below 1.0400, proving us wrong in the process. One more low, below 1.0339, may be in ordet before the USDCAD makes another attempt at a reveral. We say that because the rally from the low is corrective so far and could be a 4th wave. Once we see a clear 5 wave rally, we will look to get bullish.

Strategy: Flat

Australian Dollar Ending Diagonal Indicates Reversal Potential
Commentary: The AUDUSD is little changed as the rally from .8707 is choppy (possibly a diagonal), which warns that upside momentum is waning. .8840 has been a measured objective and the high this morning is at .8870. Risk of a reversal is high as evidenced also by the RSI divergence (on multiple time frames).

Strategy: Flat

New Zealand Dollar Decline Corrective
Commentary: We have been looking for a decline and wrote yesterday that “the form still suggests that any decline will be corrective and that Kiwi is headed higher. .8247, the 161.8% of .7714-.7940/.7882 is a new target.” We still look for Kiwi to advance towards this level over the next few months but a correction is currently playing out. A c wave should come under .7996 in order to complete the correction. Wave c would equal wave a at .7968.

Strategy: Bearish now, against .8107, target .7968

Jamie Saettele is a Technical Currency Analyst for FXCM.