Euro Tests Top Side of Diagonal; Bullish Case Bolstered

Daily Forex Technicals | Written by DailyFX | Mar 10 09 14:36 GMT |

EURUSD bullish against 1.2550 GBPUSD drop below 1.3740 may complete wave B AUDUSD holds critical support NZDUSD bullish against .4890 Euro / US Dollar Since the January 23th low, the EURUSD has unfolded in a triangle and terminal thrust or zigzag and ending diagonal or both. The point is that all price action for over the past month has been corrective. “As such, know that once the turn occurs, it will be fast as turns that occur from ending diagonals are. Until that turn occurs, the EURUSD likely continues its frustrating choppy trade. There are 2 areas to look for longs; the low side of the diagonal line and a break of the top side.” The EURUSD is testing the top side of the channel now. Longs on the FX Technical Weekly were triggered today. Bulls are in control as long as price is above 1.2550. British Pound / US Dollar The count on the daily, which shows 5 waves down from the 2007 high, indicates that risk of a sharp advance is high. The count that I am working with now treats the rally from 1.35 to 1.4990 as wave A of a flat (flats have subwaves 3-3-5). B waves of flats retrace a significant portion of wave A, sometimes retracing more than 100% of wave A (in the case of an expanded flat). Near term, a drop below 1.3740 may complete wave B. Australian Dollar / US Dollar It is entirely possible that a larger flat is underway in the AUDUSD in the guise of a complex W-X-Y pattern that will end above .7275. Exceeding .6562 would shift the odds in favor of this bullish interpretation. Until then, the AUDUSD is in “no-man's” land. Coming below .6283 would give scope to a test of .60. New Zealand Dollar / US Dollar The NZDUSD has declined impulsively (5 waves) since its 2008 high and that decline was followed by a 3 wave rally (from the November low). The decline from .6090 is now in 5 waves and the risk of a sharp advance back to at least .5454 in a small second wave is high. The close above the trendline from early January as well as divergence with RSI on the daily favors bulls. US Dollar / Japanese Yen Resistance for the USDJPY is at 100.50 / 101; which is the November 4 high / 61.8% of the decline from 110.71. RSI is rolling over from above 70, which warns of a top. Still, short term structure suggests that one more is needed before a more permanent top is in place. Expectations this week are for a push above 100. 101-103 is the reversal zone. US Dollar / Canadian Dollar The USDCAD has exceeded the October high and there is no chart resistance until 1.3260, which is the October 1995 and November 1996 lows. It is entirely possible that 1.40, the May 2003 high, is reached given that this break comes from a consolidation of 4+ months. US Dollar / Swiss Franc “Expectations are for the USDCHF to decline to at least 1.13. This is where the ending diagonal, which are usually fully retraced, began.” Risk can be moved from 1.1891 to 1.1690. 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.