EURUSD – Near term, the subdivisions impart a bullish tone. The decline from 1.3413 to 1.3256 is in 3 waves and thus corrective. … … We proposed yesterday that the rally from 1.3256 to 1.3377 is either wave i or b.

With the rally from 1.3253 taking on impulsive characteristics,
we are expecting a break above 1.3377 and ultimately 1.3413 with the
decline from 1.3377 nearing an end. 1.3483, the 3/11/2005 high, is
potential resistance on a break above 1.3413. 1.3253 is critical
support. We are looking for a turn lower long term and coming under
1.3253 may mark that turn.

USDJPY – The USDJPY triangle is in jeopardy as price creeps towards
118.51. We have been treating this rally as an E wave that will
complete the triangle that began on 3/5, but 118.51 must remain solid.
The triangle structure suggests that the next big move is down, below
115.15 towards potential trendline support drawn off of the January 2005
and May 2006 lows just below 114.00. Bollinger band width is the lowest
since late February, just prior to the breakdown from 121.66 (tight
Bollinger bands indicate breakout potential). A rally above 118.51
destroys the triangle and focus would shift to 119.17 the 61.8% of
121.66-115.15.

GBPUSD – We are looking higher in order for a 5th wave to complete a 5
wave bullish sequence that began at 1.9243. Wave 1 would equal wave 5
at 1.9798. Similar to the EURUSD, the decline from the recent high
(1.9729) is in 3 waves and the A and C legs of the decline are nearly
equal. We are looking for a significant top to form following one more
rally but if the pair declines below 1.9436, then probability increases
that a major top is already in place.

USDCHF – The USDCHF is attempting to break higher, having rallied
through 1.2180 resistance this morning. The short term subdivisions are
not clear but the chart we showed a few days ago that depicts the entire
decline from 1.2575 as a double zigzag correction remains valid. A
break above potential trendline resistance drawn off of the 2/12 and
3/12 highs would increase confidence in the upside.

USDCAD – the USDCAD continues to work towards channel support that we
have focused on so there is no reason to alter our outlook. This big
decline is likely the C wave of an A-B-C decline from 1.1879. 1.1512 is
where the C wave decline would equal the A wave decline. Support is
reinforced by the confluence of channel support / 11/21/2006 high at
1.1470. The pair is likely to chop lower to test the mentioned support
near 1.1470/1.1512 before a major rally attempt.

AUDUSD – Focus remains on .8130 but the Aussie is nearing the latter
stages of a long term rally. Daily RSI has crossed above and then below
70 (overbought) for the first time since November 2006. The rally from
.7680 is in 5 waves and could be the end of the 5th wave in the 5 wave
bullish sequence that began in April 2001 (see chart below). If this is
the case, then we are near a major top and the next big move is towards
.7000. There is no evidence yet that a top is in place well require
a 5 wave decline (even at the smallest degree) in order to claim that a
top is in place.

NZDUSD – Kiwi has not moved much in the last 24 hours as price has been
contained between .7168 and .7114. We continue to favor the longer term
reversal scenario. Evidence that we have cited in recent days include
extreme risk reversal rate, major resistance at .7200 and now we can add
a potential head and shoulders reversal pattern, evident on intraday
charts. A decline below .7081 would break the neckline and warrant a
bearish bias.

Best,

David Rodriguez
Currency Analyst
Forex Capital Markets
32 Old Slip, 10th Fl
New York, NY 10005
(646) 432-2079
drodriguez@dailyfx.com

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