Weekly Technical Update: Greenback Weakened Post Non-Farm Payroll

The USD was in consolidation/ correction mode this week ahead of the NFP. This is in a sense the market's way of paring some overextended USD gains, but also offers a chance for the market to continue with greenback strength. There was some dollar strength immediately after the release, but when the ISM manufacturing data came out worse than expected, the market went back to dollar weakness. It appears that the USD may be turning the corner and will correct further next week.

EUR/USD - 1.29/1.2950 is Wave C Projection

4H and Day: The EUR/USD pair is in a bullish mode at least in the short-term and continues to do so after the NFP.

Even the alternate count was looking at 1.29/1.2950 as the target.

However this is an area of strong resistance. If the market breaks above 1.2950, it is very likely that it has turned bullish.

Otherwise, the market may may ranging. It is not longer bearish, as reflected by the strong momentum in the RSI reading rising above 70.

The decline from 1.2900/1.2950 should not break below 1.2770, which is the end of wave I, or A. If it breaks below, then we may have the ABC count scenario, instead of the I, II, III count scenario, and the market would be bearish.

The daily chart shows the market in a bullish mode after the RSI broke above 70 in August, but has yet successfully broken below 40. A break above 60 confirms bullish continuation in the intermediate term.

Note that the market broke above a longer intermediate trendline, and then broke below a shorter-intermediate trendline.

Dynamics might lead to a ranging market, which is why I anticipate resistance near the 1.29/1.2950 area, and decline to 1.28.

USD/JPY - Market Continue to Prefer JPY to USD after NFP and ISM

Daily: The USD/JPY continues to be pressured. There is not much new information, except for Friday's rejection of a rally.

The market is seen to target 83.00 in the next week.

There should not be consideration of bullish or ranging mode yet until the market can break close a 4H candle above 85.60.

In fact if the market reaches that area, it may be prudent to look for topping action and bearish continuation.

GBP/USD - The Bearish Scenario

4H and Day: The 4H chart is showing a rally attempt, possibly a 2-swing attempt that can extend to 1.5520 area.

The 1.5500 area is an important resistance already, so topping may start there in case of a continuation decline.

Also, that would be a completed AB=CD or Gartley retracement pattern.

The daily shows that if the 1.5328 area (38.2% retracement) is broken, as the next level of support is near 1.5116 (50% retracement) level.

This bearish scenario is invalid if the RSI in the 4H chart breaks above 60 and stays above. The price action should also break above 1.5550.

Then we may be turning the corner and the USD may start losing again. Otherwise, a decline towards 1.5116 is the anticipated move in the coming weeks.

USD/CAD Measured Moves are More Important Then Pattern

4H and Day: As anticipated in the USD/CAD posts this week, the market broke below the 1.50 level and developed a double top.

A pattern breakout projection targets 1.0330 area (near 61.8% retracement).

I am just not very bearish on the paid because it is ranging. In a ranging market, it may not always be prudent to anticipate swings from resistance to support.

A conservative target is between 50 and 61.8% retracement.

This is the equilibrium level of the range that has formed between 1.0150 and 1.0650.

EUR/GBP Developing a Double Top

Day: The daily chart shows the EUR/GBP going up against a declining trendline.

The market is reacting by pausing the rally at 50% retracement, 0.8350 level.

Note the RSI is remaining under 60 for now and is turning lower.

The 0.8400 area is 61.8% retracement, and is the resistance zone for this pair. Will the market extend a little further ? Or will there be topping action here at 0.8350?

In any case, the bearish scenario is invalid if the market breaks above the 78.6% retracement area and previous support at the 0.8450/60 area.

If the bearish scenario follows through, we have 2 suggested swing projections that target the zone between 0.7850 and 0.7950.

4H: The 4h chart shows the market in a possible double top development. The market needs to break below 0.8300 for the double top to be established.

Even after a break, there is a possible rally when the market tests the previous resistance area as support (0.8280).

Watch for a pullback, and if the pullback does not rally above the middle of the double top (0.8325), then the market confirms the topping action and suggests a decline towards at least 0.8230 area (61.8% retracement).

The 0.82 area is the ultimate test of the bullish scenario, which is possible as the RSI signals bullish momentum, and the market did breakout above 0.8280 area. That is why that is an important pivot to monitor.

If the market can break below 0.8200, then looking back at the daily, we have a possible swing projection.

Looking at the possible level for a stop (0.8465) and a possible target (0.7950), an entry near 0.8270 yields a reward to risk ratio near 1.6:1.

AUD/USD Stalking Path to 0.94/0.95 area.

Daily and 4H: There was a head and shoulders pattern developing a few weeks ago.

This week invalidated that pattern.

$he market is heading to the previous short-term high (in the daily chart) at 0.9220, then 0.94 area, which was the high in April.

The RSI in the daily remains bullish as it stays above 40

As a matter of fact, looking at the daily, if we project wave I onto wand is breaking 60 again.ave V, which is what the current rally is, it targets the 0.9550 area.

In the 4H chart however, we see a bearish divergence, but the market broke an important level at 0.91, so I do not expect a strong decline.

If there is one, I would watch for bottoming at 0.9030 area (previous short-term high in the 4H chart).

If that breaks, we should consider the market in sideways and not bullish mode.

GBP/JPY Breaking Above Congestion Pattern

Day and 4H: The GBP/JPY is ain a decline, but is at the moment supported at 128.70, just above the May low near 127.50.

The 4H chart shows the market in a 2-swing rally that was rejected at the 61.8% retracement level at 131.75. This completes a Gartley retracement pattern. A similar one occurred previously with the market topping at 133.50.

The swing projections suggest a target zone between 127.50 and 127.00 area.