Buy Dollar Pullbacks

Yesterday's dollar advance should be respected. Look to buy pullbacks.

Euro / US Dollar

Putting to test trendline support, the EURUSD is consolidating following yesterday’s sell-off. I’ve been bearish for some time (admittedly too long probably) but the next multi-month move should be down hard (as per the wave count above). Resistance extends to 1.4280 - sell any rally above 1.4250.

British Pound / US Dollar

If a 4th wave triangle ended at the end of July, then the subsequent rally to 1.7050 was a terminal thrust and a significant top is in place. A drop below 1.5800 is required in order to confirm that a top is in place however. Near term structure is not especially clear but a rally above 1.6390 could complete a flat correction from 1.6150. In such an event, fade the move against 1.6629.

Australian Dollar / US Dollar

As the AUDUSD nears its 2009 high, the bearish short term pattern has been called into question yet remained valid. A drop below .8151 would negate any bullish potential and open up a move to .7700. Short term resistance extends to .8380.

New Zealand Dollar / US Dollar

Coming under .6640 would negate the blow-off top scenario that I have discussed in recent days and also mean that channel support (since March) has been broken. In fact, that multi-month channel support is being put to test right now. Near term resistance is .6790-.6810.

US Dollar / Japanese Yen

I showed a weekly chart yesterday and the longer term analysis bears repeating - “A 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80). The rally earlier this year met former support and rolled over - which increases confidence in the bearish bias. At this point, the short term picture is quite bearish below 95.10.”
Without a clear short term count, there is little to add. Divergence with momentum on shorter time frames warn of a corrective move higher. Resistance is 93.50.

US Dollar / Canadian Dollar

The USDCAD is similar to the EURUSD in that until the pair breaks its range, there is no directional bias. However, a 5 wave decline is visible from 1.3068. The decline could be wave A of an A-B-C corrective decline or wave C of a larger flat from the December 2008 high. Either way, bulls are favored until at least 1.1730.

US Dollar / Swiss Franc

The USDCHF is in the exact same position as the EURUSD. A C wave is either complete or will complete upon slipping beneath the December 2008 low at 1.0367. A rally above channel resistance would strongly suggest a low.

British Pound / Japanese Yen

Turning to a longer term view of the GBPJPY - the entire rally from 118.79 is viewed as corrective. A double top near the 50% retracement of the decline from 215.98 may mark the end of a 4th wave advance. Expectations are for the GBPJPY to eventually drop below 118.79 in a 5th wave. Divergence with RSI at recent lows warn of a rally - which could be sharp.

Published on Thu, Sep 3 2009, 07:07 GMT