Not a Member? Join Now!   Already a Member? Sign In!

FX Technical Weekly

We expect US dollar weakness to continue next week, especially against the euro.  It is possible that the Yen is forming a bottom (Yen crosses forming tops).

EURO / US DOLLAR

Classical Outlook: Looks to be putting in a bullish reversal week and only the second up-week over the past 11 weeks. This makes a more compelling case for a medium-term base now forming and opens the door to additional corrective upside into the week ahead. Weekly stochastics still reside in oversold territory and suggest that we could indeed be poised for near-term gains. Look for a break back above 1.2960 to accelerate.  Below 1.2455 negates.

Elliott Wave Outlook: Trading above 1.2816 triggered a bullish bias, confirming that the ending diagonal from 1.3333 is complete.  Continuation is expected to at least 1.33 as long as price is above 1.2730.  An acceleration of the advance is expected next week.

BRITISH POUND / US DOLLAR

Classical Outlook: The latest round of setbacks have stalled out by the weekly lower Bollinger, and just ahead of the key trend lows from early 2009 at 1.3500. There is however some hope for bulls with the formation of a hammer-like close on the weekly, to potentially suggest that the market could be prepping for a more significant upside run in the coming week. A break back above 1.4185 will be required to confirm.

Elliott Wave Outlook: A flat may be forming from 1.35.  Trading above 1.4309 would trigger a bullish bull bias against 1.3650 and set the stage for a rally in wave c to above 1.50.  Until price exceeds 1.4309, it is possible that the GBPUSD drops below 1.3650 to complete a diagonal from 1.4665 as wave c of B.

 

AUSTRALIAN DOLLAR / US DOLLAR

Classical Outlook: Continues to show evidence of basing with the market putting in a bullish doji close in the previous week and gaining momentum into the current week with price breaking back above 0.6555 to test the 20-Week SMA.  Scope now exists for additional gains over the coming week back towards 0.6850. Only back under 0.6285 negates and puts the pressure back on the downside.

Elliott Wave Outlook: Rallying above .6562 triggered a bull trend in what could be wave Y of a complex correction from .6005 that will end above .7272.  The bull count is valid as long as price is above .64.

>

NEW ZEALAND DOLLAR / US DOLLAR

>

Classical Outlook: Showing good follow through from the previous bullish weekly close and could be poised for additional upside over the coming weeks back towards critical resistance by 0.5450 (9Feb high) from where a resumption of the broader downtrend is to be expected. Only back under 0.4895 negates.

Elliott Wave Outlook: Last week: “trading through the Elliott channel indicates a reversal.  RSI divergence strongly suggests the drop from .5454 was a 5th wave.  A recovery to at least .5454 is favored.”  Short term weakness back to .5150 is possible but risk can be moved to .5060 now.

>

US DOLLAR / JAPANESE YEN

>

Classical Outlook: Gains have finally stalled out since reaching yearly highs by 99.70. The weekly chart shows a potential negative close and confirmed break of a sequence of 6 consecutive weekly higher lows and higher highs. This opens the door for a resumption of the broader downtrend with a break below 95.65 to confirm. However, inability to break back below 95.65 will keep the current corrective rally intact and expose 104.00 area.

Elliott Wave Outlook: While the advance from .8709 is viewed as corrective (flat) in the bigger picture, structure may not be complete.  Wave 5 of C could end in the 101-103 area.  Dropping below 95.64 warrants a bearish bias against 99.72 for resumption of the larger decline.

>

US DOLLAR / CANADIAN DOLLAR

>

Classical Outlook: A bearish outside weekly warns the current up-move could be exhausted for now, opening the door for a potential pullback in the coming week. We need to see a break below 1.2630 low to confirm, but should this occur, look for the decline to extend potentially all the way back into the 1.2200’s before a resumption of the broader up-trend. Failure however to take out 1.2630 will keep the focus on the up-side.

Elliott Wave Outlook: Staying above 1.2350 (although price ideally remains above the short term trendline just below today’s low) keeps the breakout scenario from a 4th wave triangle intact.     

>

US DOLLAR / SWISS FRANC

>

Classical Outlook: The market has put in a bullish outside week that has consumed the previous 4 weekly ranges. However, despite the extremely bullish price action this week to fresh 2009 highs by 1.1970, we are not entirely convinced that the market is ready for a breakout after failing to establish a close above the 78.6% fib retracement off of the 2008 high -2009 low move. As such, we prefer to stand aside.

Elliott Wave Outlook: It is still possible that a diagonal is complete and that the spike above 1.19 was wave B of a flat from 1.1891.  If this interpretation is correct, then price will drop below 1.1430 from current levels.  Only a drop below 1.1686 would inspire confidence in this count.

>

EURO / JAPANESE YEN

>

Classical Outlook: The cross looks like it is in the process of attempting to carve out a major double bottom. The market has now failed to establish below the 115.00 handle in late 2008 and then again in early 2009 and has been slowly recovering back towards neckline resistance which comes in at 131.05. An eventual break above 131.05 would ultimately project gains back towards the 145.00 area over the longer-term. Below 121.75 negates.

Elliott Wave Outlook: Far from clear.  Wave C of a flat could be working higher to end above 131.  It is also possible that the rally from 112.04 is a small second wave that will top soon, or has already topped (today).  Aggressive traders may want to take a chance on a short against 131.20 in expectation that the multi-month range holds…recent headlines are a bit too bullish for EURJPY.

>

EURO / BRITISH POUND

>

Classical Outlook: The market has shown good upside follow thorugh following the previous bullish weekly reversal with gains extending to 0.9320 ahead of the latest minor pullbacks. Ultimately, any upside is still classed as corrective with a medium-term lower top now sought out below 0.9520, ideally in the 0.9300’s, ahead of the next major downside extension below 0.8635. Above 0.9520 negates and exposes a 0.9805 retest.

Elliott Wave Outlook: From last week: “The decline from .98 is in 3 waves (corrective).  Small 1st and 2nd waves appear complete at .8724.  The advance should accelerate in wave 3.”  There is no change as wave 3 is still underway.  Price is expected to exceed .9805 before an important top forms.  Coming under .9016 would require a reassessment of the situation.

>

EURO / CANADIAN DOLLAR

>

Classical Outlook: The broader structure remains constructive with the cross putting in yet another weekly higher high and higher low and now on the verge of establishing fresh 2009 highs. Next key topside resistance comes in by 1.6645 (2009 high), and we expect this level to easily be taken out.  Only back below 1.6220 gives reason for concern and negates bullish outlook.

Elliott Wave Outlook: From last week: “Decline from 1.7522 is in 3 waves and that high should be exceeded.”  There is no change to the outlook.  Staying above 1.6212 keeps the bull strong.

>

BRITISH POUND / JAPANESE YEN

>

Classical Outlook: Despite some severe setbacks in the current week, the market has recovered quite impressively and now trades back close to opening levels to set up a hammer close. This likely opens the door to additional upside into the week ahead and we look for a break back above 141.80 to confirm. Inability to take out 141.80 however, will negate the bullish close and signal a broader resumption of the bear trend.

Elliott Wave Outlook: The GBPJPY advance from 118.79 is viewed as corrective.  Specifically, the advance is part of a 4th wave.  With 3 waves up from 118.79, either a flat or triangle is underway.  A b wave decline may have be underway from 141.85.  b waves are usually choppy (not always), so trading the move is difficult.  Below 131.42 would confirm that wave b is underway.

 

>