The Buck Does NOT Stop Here

Daily Forex Technicals | Written by DailyFX | Jul 25 08 13:47 GMT |

The dollar rally to this point has been impressive. A continuation of the rally is expected. EUR/USD We turned bearish at 1.57 yesterday, mentioning that the drop from 1.5944 was awfully deep for a correction. Although 1.5611 has been the bullish ‘line in the sand’, the alternate count treated the advance from 1.5283 as a B wave flat and the drop from 1.6039 is wave C of the flat and will not end until below 1.5283. Additionally, if we are correct in our flipping to bearish, then the strongest part of the decline should be upon us and price should remain below 1.58. For the first time in a long time, bulls are on the defensive. STRATEGY: Bearish, against 1.5797, target below 1.5283 USD/JPY Preferred count: The advance from 95.72 is wave W in a W-X-Y complex correction and the drop from 108.57-103.76 is wave X. Wave Y is underway towards 116 (equality with wave W). Alternate: price action from 108.57 is forming a triangle in wave X. The best strategy is to play a bullish break. GBP/USD The GBPUSD tested and held the trendline drawn off of the 6/13, 7/7, and 7/8 lows. Still, it is likely that wave D of the triangle is underway towards 1.9550/1.96. This is our stance as long as price is below 2.0075. USD/CHF A major reason that we have switched to a generally USD bullish bias is the USDCHF. The pair has broken above a channel that has held since early May. Under this count, the 3 wave rally from .9647 was wave W in a complex correction. The choppy decline from above 1.06 serves as wave X and wave Y is underway now. Expect the advance to reach 1.10 (former 4th wave). USD/CAD The USDCAD continues to advance off of what we perceive to be the wave E low at .9974. Expectations are for a bullish break above 1.0378 in the next few weeks. We’ll discuss objectives when warranted. Price ideally remains above 1.0077. STRATEGY: Bullish, against .9818, target above 1.0378 AUD/USD The weekly chart of the AUDUSD puts into perspective just how significant of a top may have formed at .9849. Price spiked through the upper channel line last week and is now testing a resistance line drawn off of the August 2007, January 2008, and June 2008 lows. Expect a bearish break. NZD/USD Kiwi is a bit ahead of the AUDUSD in terms of its longer term structure. The decline is clearly more mature but still has a ways to go. The break of .7445 signals makes it likely that price will remain below .7761 going forward. Watch the longer term trendline drawn off the June 2006 and August 2007 lows. This level should provide at least interim support. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.