Forex Technicals: The Day Ahead, October 3

The US dollar is a beast. The EURUSD closed at its lowest level since September 2007. Where is support?

EURUSD

If the decline from 1.4871 is an impulse, then these may be the subdivisions. Wave 3 is coming to an end (potential support at the 161.8% extension…at 1.3681). A 4th wave correction should follow and give way to lower prices in wave 5. The triangle and flat counts proposed in recent days remain valid. In summary, the EURUSD is at a crossroads.

USDJPY

The USDJPY is still in a range. I favor the downside as long as price is below the trendline from the 110.71 top. The 200 day SMA is sloping down (barely) and right at current price. Whichever way this break goes; it should be violent.

GBPUSD

The continued decline in Cable makes the decline from 1.8675 in 7 waves, which is a double zigzag correction. Nothing is ever certain, but the weight of evidence suggests to me that a larger correction of the decline from mid July is more likely than a bearish break here. Evidence includes RSI (on this chart), and COT data.

USDCHF

The USDCHF is testing a short term resistance line. This line and the September high at 1.1421 are resistance levels. A push above there may lead to a breakout. If a decline occurs, then support begins at 1.1142.

USDCAD

To this point, the advance from 1.03 is still a correction (3 waves). Price came close but did not exceed 1.0827. Even if the larger trend is up, a 4th wave correction is likely near term.

AUDUSD

The decline from .8524 has taken the form of an impulse, signaling that the larger trend is down. Expect a rally (that should be corrective…the form of the rally will confirm or negate the bearish bias against .8524), and look for resistance beginning at .8101.

NZSDUSD

The advance from .6435 is in 3 waves so the long term decline may be back underway. It is also possible that a larger correction is underway that will end closer to .72.

DailyFX

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