British Pound/Dollar at Support; Rally Expected

Daily Forex Technicals | Written by DailyFX | Jan 13 09 15:23 GMT |

euro / dollar shows signs of short term low GBPUSD forming right shoulder of incerse head and shoulders? USDCAD triangle underway AUDUSD due for a bounce; resistance at .6784 EUR/USD The decline from above 1.47 is wave (b) in what is either a triangle or flat that began at 1.2327. In either case, additional downside is expected but probably not before a test of resistance near 1.3450. We should have the opportunity to buy below 1.30 late this week. USD/JPY To review, the USDJPY rally failed just short of “the 61.8% of 1006.60-87.09 at 95.21. This is also the center of a former congestion zone (roughly 94-97) as well as the 100% extension of the rally from 87.09 to 91.31; at 94.08.” The rally from 87.09 is in 3 waves, which is corrective. As such, a drop below 87.09 is expected. Near term, the decline from 94.67 appears impulsive and a small second wave corrective advance may be complete at 91.69. Staying below there keeps the bear count on track. A move above 91.69 would bring to the forefront the possibility that the corrective advance from 87.09 is not complete and that a complex correction (w-x-y) is underway that will end above 95.21. GBP/USD The GBPUSD has plunged to test 1.4550 this morning. 1.4347 is viewed as the end of a 3rd wave that began at 2.0162 and a retracement of this decline is underway now. If this count is correct, then the GBPUSD should find a bottom soon (before 1.4347). An inverse head and shoulders pattern may be unfolding now as well. USD/CHF The sharp drop from 1.23 is in 5 waves and probably wave A within an A-B-C correction that will end below 1.0367. The rally from 1.0367 is the B wave of that sequence and likely tests resistance from Fibonacci 1.15, eventually. Since the advance from 1.0861 is an impulse (5 waves), wave b is considered complete at 1.0861. Near term, it is unclear whether or not a small second wave is complete. USD/CAD Recent strength in the USDCAD suggests that a triangle is unfolding as wave 4. Triangles unfold in 5 waves (a-b-c-d-e) and wave d is underway now. There is potential resistance at 1.2520 and 1.2750 going forward. The best strategy is to wait for wave e to end before attempting a long position (may be at least a week). AUD/USD I wrote yesterday that “weakness likely extends to .6750.” The AUDUSD has dropped below .67 and at least a corrective advance is due in what could be a small 4th wave. Initial resistance is at .6784. NZD/USD The advance from .5186 failed to retrace even 38.2% of the drop from .8219. As such, it seems unlikely that the rally from .5186 is complete. There is potential support in the .5346-.5415 zone. Additionally, an inverse head and shoulders may be underway from the October 2008 low. 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.