Euro Large B Wave Correction
Commentary: Little to add to the EURUSD as last night/this morning’s rally came within pips of 1.3684. Potential does remain for a push to the 1.3750 area before a reversal. However, the advance from 1.3360 has stalled near the 61.8% retracement from the top (1.3852) to 1.3360. The idea that a larger more complex correction is playing out from 1.3852 strengthens each day that the EURUSD fails to make a new high. As we have decribed in recent days, our favored view is that the decline from the top (1.3852) is large wave A and the advance from 1.3360 is large wave B (which may be complete at 1.3684). Large wave C is expected to eventually come under 1.3360. This decline will most likely be extremely fast. At this point, a cautious bearish bias is warranted below 1.3684. A break of 1.3563 instills confidence in the bearish bias.

Strategy: Flat, bearish on a break below 1.3563

Japanese Yen Large Correction Still Unfolding
Commentary: Bigger picture, the USDJPY has traced out 5 waves lower (which is large wave 1)from 124.13 to 111.59, indicating a large degree trend change. Since the low at 111.59, it is our contention that an A-B-C correction is unfolding as large wave 2. Within this A-B-C, wave C might be underway from 113.86. A break above 116.24 warrants a bullish stance against 115.22, targeting 119.34 (61.8% of 124.13-111.59) for the completion of wave C (wave 2). The best opportunity will be to the downside for wave 3 lower. This most likely will not present itself until next week.

Strategy: Flat (waiting for wave 3 bearish opportunity)

British Pound Short Term Bullish
Commentary: The structure of Cable is virtually the same as the EURUSD. That is, in the intermediate term, we expect both pairs to turn lower and head much lower. However, just as the EURUSD could make a new high before reversing (1.3750??), the GBPUSD appears that it too will make a new high. We can not ignore the fact that setbacks since 8/17 have occurred in 3 waves. 3 means indicates countertrend movements, therefore the trend is pointed higher. Look for a top and reversal near the 61.8% of 2.0654-1.9651 at 2.0271.

Strategy: Short term trade idea - bullish against 1.9961, target 2.0271 and 2.0439 (move to BE after T1 hit)

Swiss Franc Breakout Opportunities
Commentary: With price action remaining choppy on a short term basis, we are showing the daily chart today for perspective. The daily chart shows a clear 5 wave rally from the December 2004 low to the November 2005 high. Everything since has been a correction. However, the correction is not complete. A complex correction has unfolded from the November 2005 high (W-X-Y). Wave X is a triangle, which means that we should expect a terminal thrust lower to complete the correction. The thrust to 1.1815 is most likely just the first leg of wave Y lower. As such, we are looking for price to come under 1.1815 before any meaningful bottom is in place.

Strategy: Flat (best idea here is to sell breaks lower….first bearish pivot at 1.1960)

Canadian Dollar Head and Shoulders Continuation
Commentary: After briefly trading above 1.0666, the USDCAD has come off again. One possibility is that the rally from 1.0470 completed an expanded flat correction from 1.0531. However, the longer term charts (we are showing the weekly today) indicate that a significant bottom may be in place at 1.0340. A rally above 1.0676 most likely leads to a break above 1.0866. Short term, there is a possible head and shoulders continuation pattern, which is bearish. This pattern would suggest a retest of 1.0340 is in order before a reversal occurs.

Strategy: Flat

Australian Dollar Large B Wave
Commentary: A correction is undoubtedly playing out right now in the Aussie (all pairs actually). The 3 wave movements at carrying degrees of trend make this clear. There are a number of possibilities right now, too many to take a strong stand one way or the other. Price could come under .8051 to test the 61.8% of .7673-.8333 in a b wave before proceeding higher in wave c to complete the correction from .7673….or a b wave bottom may already be in place and price could continue higher from above .8051 to complete the c wave. A rally through .8234 favors the latter scenario and a drop under .8051 favors the former.

Strategy: Bearish Target 1 hit on AUDUSD at .8072, move to flat

New Zealand Dollar Towards .7500?
Commentary: Naturally, the Kiwi is in the exact same position as the AUDUSD. Since the NZDUSD already tested the 61.8% of .6639-.7272 at .6881, it seems more likely that a B wave low is already in place at .6869 and that price is headed higher in wave C to test .7500 before a reversal. .7501 is the 100% extension of .6639-.7272/.6869 and .7547 is the 61.8% retracement of .8082-.6639.

Strategy: Flip to bullish, against .6869, target .7500

Jamie Saettele is a Technical Currency Analyst for FXCM.