Commentary: We are working with a few counts currently, but both point lower near-term. It is possible that 5 waves higher are complete at 1.3719. A decline should unfold then correctively with potential for a bottom to form near 1.3497 (61.8% of 1.3360-1.3719). Another count has the entire rally from 1.3360 as larger wave B within a more complex correction from 1.3852. If this is a correct count, then wave C of the correction may be underway from 1.3719 and price is headed much lower, below 1.3360 and to the 1.3000 area. Either way, look lower near-term. If the decline from 1.3719 unfolds in 5 waves (impulse), then the count that has the EUR/USD headed below 1.3360 will be favored.

Strategy: Bearish now, against 1.3719, target 1.3510 and TBD

Japanese Yen Wave 2 Unfolding
Commentary: Bigger picture, the USD/JPY 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, targeting 119.34 (61.8% of 124.13-111.59) to complete wave 2 from 111.59. The best opportunity will be to the downside for wave 3 lower, so look for a top and reversal near 119.00/50.

Strategy: Flat (waiting for wave 3 bearish opportunity)

British Pound to Test at least 1.9961
Commentary: The structure of Cable is similar to the EUR/USD. 5 waves higher may have ended at 2.0233, so we are looking for a decline to at least the prior 4th wave at 1.9961. The 61.8% of 1.9651-2.0233 is also a potential bottoming point. An alternate count is much more bearish and places Cable in a large wave C decline from 2.0233 within a larger complex correction from 2.0632.

Strategy: Move to flat (previously bullish)

Swiss Franc Pivot at 1.1960
Commentary: There is no change to the outlook that calls for a terminal thrust to come under 1.1815 while 1.2215 remains intact. “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 Pivot at 1.0676
Commentary: Near-term USD/CAD price action is choppy and corrective as well, which makes trading this pair on a short term basis risky right now. When price action is choppy, we prefer to sit tight and wait for a clearer pattern to emerge. The longer-term charts 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 while 1.0676 remains intact.

Strategy: Bullish on a break above 1.0676, against 1.0340, target TBD

Australian Dollar Multiple Possibilities
Commentary: The AUD/USD is correcting the .8870-.7673 decline. The 3 wave movements at varrying 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: Flat

New Zealand Dollar Could See .7500 This Week
Commentary: Naturally, the Kiwi is in the exact same position as the AUD/USD. Since the NZD/USD 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: Remain bullish, against .6869, target .7500

Jamie Saettele is a Technical Currency Analyst for FXCM.