Euro Bullish Against 1.3551
Commentary: We wrote yesterday that “the rally from 1.3551 is in 5 waves itself and suggests additional gains as long as price is above 1.3551. Allow for some weakness to be followed by a strong rally in wave iii of 3. This short term outlook is negated on a drop under 1.3551.” Patterns continue to unfold in a bullish manner. That is, the decline from 1.3709-1.3663 is in 3 waves (corrective). Whether this is just the first leg of a bigger correction back to 1.3635 remains to be seen. Subjectively, we favor a deeper correction (back to at least 1.3635) before the next advance.

Strategy: Remain bullish, risk is at 1.3551, target above 1.3852

Japanese Yen Ready to Break?
Commentary: We proposed a bearish triangle interpretation yesterday that would call for a terminal thrust lower (possibly below 111.59). A new low below 114.80 at the least is expected as the rally from there is clearly a 3 wave advance ending in a spike high last night at 115.63. Favor the bearish side as long as price is below 116.46 as the decline from there is impulsive. Very short term, favor the bear side below 115.63. A break below 114.80 places focus on 114.35 ans subsequently the 61.8% of 111.59-117.12 at 113.70.

Strategy: Flat (waiting for wave 3 bearish opportunity)

British Pound Alterate Count Is a Diagonal
Commentary: Cable is tracking our count. 5 waves 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 at 1.9874 is also a potential bottoming point. The rally this morning to 2.0262 is most likely wave b within a flat correction. Look for wave c of the correction to bring price just below 2.0043 before the larger rally resumes. An alternate count has a diagonal unfolding from 1.9961, in which case a new high would be registered before a return to 1.9961.

Strategy: Flat

Swiss Franc Clear Opportunity
Commentary: The count is tracking perfectly. “The clear 5 wave decline from 1.2151 to 1.2010 confirms that the thrust below 1.1815 is in its early stages. Allow for a 3 wave correction to at least 1.2062 and possibly 1.2097 (61.8% of 1.2151-1.2010). That sets up an opportunity to get aggressively bearish against 1.2151 for wave iii of 3 lower.” Waves a and b of the correction are complete and wave c should bring price back to at least 1.2062.

Strategy: Remain bearish, risk at 1.215, target below 1.1815

Canadian Dollar Testing Neckline
Commentary: USDCAD price action remain choppy. The head and shoulders continuation pattern is on the verge of confirmation as price has tested the neckline this morning. However, the structure of the decline is not clear, which makes going with this break dangerous. The longer term wave structure also gives scope to a major reversal. This is why we favor playing a break above 1.0676. At the current juncture, the pair is testing the neckline and a break could see a quick test of the 1.0340 level.

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

Australian Dollar Rally Is Corrective
Commentary: No change in the AUDUSD as the pair trades in a tight range. “The rally from .8051 is most likely wave b of B within an A-B-C from .7673. Look for a drop below .8051 and possible test of the 61.8% of .7673-.8333 at .7925. A bullish opportunity presents itself there as we would then look for price to turn higher in wave C of the correction from .7673 and eventually test the 61.8% of .8870-.7673 at .8412.”

Strategy: Flat

New Zealand Dollar Weakness Should Be Marginal
Commentary: Look for a drop below .6834 to complete the decline from .7272, which would be wave b in the correction from .6639. Potential support is the 78.6% of .6639-.7272 at .6775. A strong rally in wave c is expected to register a new (above .7272).

Strategy: Flat (look to get bullish close to .6775, against .6639, target above .7272

Jamie Saettele is a Technical Currency Analyst for FXCM.