Dollar Confined to Range: Watch for a Break

The eur / dollar range has tightened, so expect a break soon. 1.2855 remains the bearish line in the sand.

EUR/USD

The euro / dollar trend is down as long as price is below channel resistance and 1.2861 specifically. Still, until a break of the large range (1.30-1.23) that has held since late October, confidence in directionality is low. For now, I am sticking with the triangle count (4th wave complete).

USD/JPY

The larger USDJPY trend is down so strength should be sold. It is unclear though whether or not the rally from 90.86 is complete. As long as price remains below 98.31, bearish potential is significant. However, support from the 61.8% of 90.86-100.60 is a warning that 100.60 could be broken (since 61.8% is a level that tends to hold B waves of zigzags).

GBP/USD

Still confined to a steep channel, the British Pound remains bearish. There is no sign of a bottom, although channel support comes in just below 1.43 this week.

USD/CHF

Short term USDCHF structure is unclear but the long term wave count presented in the monthly forecast is bullish. Higher highs and higher lows since the March low favors bulls as does the break above a line from late 2005. Round number resistance at 1.20 has held to this point but a break higher is expected. The August 2007 high is the next level of chart resistance just above 1.22.

USD/CAD

There is no change to the call for a push above 1.3025 prior to formation of a more important top. Bulls can move risk to 1.2082 (Friday’s low).

AUD/USD

There remains potential for a large recovery back to the mid .70s given the 5 wave drop from the top (waves a and b of an a-b-c correction would be close to complete). A rally above .70 would warrant a bullish breakout strategy. Until then, range conditions may persist.

NZD/USD

The implications from a short term head and shoulders pattern are bearish as long as price is below .59 but there remains the possibility of a larger recovery in a C wave to above .6137 (same as AUDUSD structure). Range traders may also want to nibble at the long side here since Kiwi is at the lower end of its recent range.

DailyFX

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