Dollar Flexes again: Rivals Look for Support

Daily Forex Technicals | Written by DailyFX | Jan 23 09 15:05 GMT |

euro / dollar slips below 1.28 GBPUSD Tests 1.35 USDCHF resistance at 1.18 EUR/USD I wrote yesterday that “strength in late New York trading may have signaled the turn that I have been expecting.” So much for that thought as the EURUSD has fallen through 1.28. I still maintain that the decline from 1.4723 is corrective in nature - either the second leg (a b wave) of a triangle or flat. At this point, wave b can not be considered complete until price exceeds 1.3090. There is downside potential until 1.2477, which is where the two zigzags would be equal. A note from a trading perspective; it sometimes takes a number of attempts in order to catch 'the' turn. As long as these losses are manageable, then you'll be around when 'the' turn does occur. USD/JPY 5 waves down from 94.67 followed by 3 waves up to 91.33 favors USDJPY bears. I want to reiterate that the ultimate objective remains below 80 (all-time low). While the USDJPY corrective advance is likely complete at 91.33, do not be surprised to see additional consolidation / correction of the drop to 87. That sharp 'panic' decline is the kind of action that tends to mark at least short term lows in the USDJPY (as illustrated by yesterday's chart). GBP/USD The GBPUSD continues to slump, having nearly touched 1.35 this morning. There are a number of valid counts from the current juncture (the decline from 1.5728 could be wave b of an expanded flat). The above count treats the decline from 1.5728 as wave 5 of the decline from 2.1160 (2007 high). This decline is nearing its end as it is finishing up wave iii. A 4th wave correction (resistance near 1.40) may lead to one more leg down prior to a significant low is in place. A rally above 1.4347 would begin to make the picture more immediately bullish. USD/CHF Over the past few weeks, I have written that “the rally from 1.0367 is the B and likely tests resistance from Fibonacci 1.15.” The 61.8% of 1.2303-1.0367 is at 1.1524 and the USDCHF has managed to push through there. The next level of measured resistance is where wave c of B would equal wave a of B; at 1.1822. A wave B top is expected to form soon. Those willing to take the risk can establish shorts against 1.2303, targeting a drop below 1.0367 over the next few months. USD/CAD I have written at length in recent weeks about the triangle in the USDCAD. Triangles unfold in 5 waves (a-b-c-d-e) and wave d is nearing completion. The rally to 1.27 may have completed wave d, therefore a decline in wave e is expected. The best strategy is to wait for wave e to end before attempting a long position (may be late this month), although high risk takers may wish to try the short side against 1.3012, targeting a drop in wave e towards 1.20. AUD/USD 5 waves down from .7275 and 3 waves up from .6534 confirms that the larger trend remains down. Near term, a corrective advance of one smaller degree may be complete at .6664. The trend is bearish against that level, targeting a drop below .60. NZD/USD There are 5 waves down from .6041 and 3 waves up from .5274. This price action confirms that the larger NZDUSD trend is down. Shorter term, the decline from .5551 appears impulsive and the correction of that decline may be complete at .5370. 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.