Euro Tests 1.3800
Commentary: As expected, the EURUSD rallied strongly in a third wave on Friday. There is no reason to change the outlook at this point for a new high (above 1.3852). Very short term, the pair could drop below 1.3755 to complete a flat correction before the larger advance continues. The bullish bias is strong as long as price is above 1.3663.

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

Japanese Yen Targeting 111.59?
Commentary: We wrote on Friday that “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.” The USDJPY plummeted Friday and opened this week lower, trading to 112.59 last night. To this point, the advance from 112.59 is in 3 waves and fits as a 4th wave correction in a 5 wave bearish cycle from 116.46. Expect at least a slight new low (below 112.59), likely today. Since a drop under 112.59 would complete 5 waves, risk of a pullback would be high at that point.

Strategy: Flat

British Pound Needs to Correct Lower
Commentary: Cable has traded in a choppy manner but continues to trade with a bullish bias. It is possible that the GBPUSD is in a third wave now and that a very strong rally will begin in the next few hours. However, we favor a drop below 2.0243 to complete a flat correction and then the strong rally. The bullish scenario is best served by this since the rally from 2.0243 takes on a 3 wave corrective form and is most likely a small wave b.

Strategy: Look to get bullish after a drop below 2.0243, against 2.0159, target above 2.0654

Swiss Franc Small Wave 4?
Commentary: The count that calls for a new low (below 1.1815) continues to track well. Continue to favor the downside and a break of 1.1815. A bearish objective is at 1.1793 (161.8% extension of 1.2215-1.1993/1.2151). Resistance should be strong up to 1.1925 (former congestion). The next day could see some choppy trading take place in the wave 4 position before a test of 1.1815 and lower. Still though, favor the downside.

Strategy: Remain bearish, move risk to 1.1993 (from 1.2151), target 1.1795

Canadian Dollar Range Is Tightening
Commentary: There is nothing to add to the USDCAD as range is the order of the day. 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.

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

Australian Dollar Breaks Below Support Line
Commentary: The AUDUSD has broken below the short term support line drawn off of the 8/29 and 8/31 lows. The rally from last night’s low (.8174) appears corrective so favor the bear side from current levels. We expect the entire rally from .8051 to be fully retraced.

Strategy: Bearish now, against .8285, target below .8051

New Zealand Dollar Alternate Interpretations
Commentary: On Friday, we wrote “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).” Afer dropping below .6834, Kiwi has rallied back above .6900 this morning. However, keep risk tight as the rally to .6947 could be the end of a flat correction from .6834. We are showing that interpretation this morning. A bullish bias is warranted as long as price is above .6824.

Strategy: Flat

Jamie Saettele is a Technical Currency Analyst for FXCM.