FOREX REPORT FOR THE DAY:06/01/2010
Sterling Tumbles on Deficit Concern, Dollar Recovers as Commodities Lose Momentum
Sterling continues to be the weakest major currencies and drops broadly today on concern on the increasing debt level of the country as well as on report of a rift between UK Chancellor Darling and PM Brown over the UK deficit of GPB 178b. An article by FT said that Darling's position is that revenue from growth should be used to cut borrowings rather than increase spending. This was in contrast to Brown's comment that such extra revenues should be used to boost spending to reduce pain of looming cuts. Sterling is pressured across the board and the weakness is particularly apparent against commodity currencies, which are lifted by strength in gold and oil prices as well as stock market rallies.
GBPAUD is the weakest major cross this week and dropped over -2.8% so far. The cross is set to extend recent fall to 1.7326 support first and break there will confirm that the long term down trend that started at 2008 high of 2.7092 has resumed. In such case, GBP/AUD should target 61.8% projection of 2.0979 to 1.7326 from 1.8302 at 1.6044 next.
Elsewhere, Japanese yen is broadly firmer with support from repatriation flows. Dollar is trying to recover in early US session as commodities are losing some momentum. Crude oil edged higher to 81.99 earlier today but lacks follow through buying to send it through 82.0 resistance yet. On the other hand, gold also edged higher to 1129.6 earlier today bug some profit taking is seen there and pushes the precious metal back to 1120 level. Nevertheless, the correction in dollar index is still in favor to continue and another fall could be seen to 38.2% retracement of 74.19 to 78.45 at 76.82. But we continue to expected downside to be contained there and bring resumption of rise form 74.19.
On the data front, Eurozone CPI rose to 10 months high of 0.9% yoy in November, inline with consensus. Germany unemployment unexpectedly dropped by -3k in December but unemployment rate climbed to 8.1%. UK PMI construction improved slightly to 47.1 in December Canada IPPI and RMPI rose more than expected by 1.0% mom and 2.2% mom in November respectively.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4294; (P) 1.4375; (R1) 1.4493; More
Consolidation from 1.4217 is still in progress and with 1.4256 minor support intact, another rise could still be seen. However, upside is expected to be limited by 38.2% retracement of 1.5143 to 1.4217 at 1.4571 and bring resumption of fall from 1.5143. Below 1.4256 will flip intraday bias back to the downside and further break of 1.4217 low will target 38.2% retracement of 1.2329 to 1.5143 at 1.4068 next.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 resistance is needed to invalidate this view. Otherwise, outlook will now remain bearish.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0234; (P) 1.0327; (R1) 1.0391; More
With 1.0420 resistance intact, USD/CHF's correction from 1.0506 might still extend further and another fall cannot be ruled out. But after all, downside should be contained by 1.0175 resistance turned support to conclude the correction and bring resumption of rise from 0.9916. Above 1.0420 will flip intraday bias back to the upside for 1.0506 first. Break will confirm rally resumption to 1.0590 medium term support turned resistance next.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already, on bullish convergence condition in daily MACD. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1032). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 92.06; (P) 92.63; (R1) 93.08; More.
USD/JPY's fall from 93.20 extends further to 91.24 in early US session and remains soft. As noted before, rise from 84.81 might have completed at 93.20 already, after missing 100% projection of 84.81 to 90.75 from 87.36 at 93.30, on bearish divergence condition in 4 hours MACD. Intraday bias now remains on the downside for % projection of 84.81 to 90.75 from 87.36 at 93.30. Intraday bias is flipped back to the downside and further decline should be seen to 38.2% retracement of 84.81 to 93.20 at 89.99 first. Firm break there will affirm this case and target 87.36 support for confirmation. On the upside, above 92.15 will turn intraday bias neutral and put focus back to 93.20 resistance. Break there will indicate that rise from 84.81 may not be over and could still extend to resistance zone of medium term trend line resistance at 95.21 and 55 weeks EMA at 94.26
In the bigger picture, at this point, USD/JPY is still trading well below medium term trend line resistance at 95.21 and 55 weeks EMA at 94.26. Hence, there is no clear indication of reversal yet. A break of 87.36 support will confirm that rebound from 84.81 has completed. The three wave corrective structure will in turn support the case that whole fall form 124.13 is resuming for 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.6014; (P) 1.6127; (R1) 1.6197; More
GBP/USD's fall from 1.6237 continues today and the break of 1.6046 minor support suggests that recovery from 1.5829 has completed after hitting 38.2% retracement of 1.6875 to 1.5829 at 1.6229. Intraday bias is flipped back to the downside for retesting 1.5829 low first. Nevertheless, note that firm break there is needed to confirm fall resumption, otherwise, we'd expect some more sideway trading first. Break of 1.5829 will target key cluster support of 1.5706 next.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.
However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475 will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.
EUR/GBP Daily Outlook
Daily Pivots: (S1) 0.8888; (P) 0.8927; (R1) 0.8997; More.
With an intraday low in place at 0.8855, bias in EUR/GBP remains neutral for the moment. Nevertheless, note that another fall is still expected as long as 0.9053 resistance holds. Below 0.8855 should bring resumption of whole decline from 0.9410 and should target 61.8% projection of 0.9410 to 0.8833 from 0.9153 at 0.8786 next.
In the bigger picture, at this point, we're still favoring the case that medium term correction from 0.9799 has completed with three waves down to 0.8399 already. Rise from 0.8399 is possibly resuming the long term up trend. Hence, fall from 0.9410 is viewed as a correction only and should be contained by 0.8704 support. Break of 0.9053 will suggest that correction from 0.9410 has completed and rise from 0.8399 is resuming for a test on 0.9799 high first and then 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.
However, break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will argue that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes.
EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.4803; (P) 1.4846; (R1) 1.4884; More
With an intraday low in place at 1.4807, bias remains neutral for the moment and some consolidations could be seen in EUR/CHF. Nevertheless, break of 1.4988 resistance is needed to indicate that EUR/CHF has bottomed out. Otherwise, another fall is still in favor and break of 1.4807 will target 100% projection of 1.5138 to 1.4894 from 1.4988 at 1.4744 next. However, consolidating mild bullish convergence conditions in 4 hours MACD and RSI, break of 1.4988 resistance will indicate that recent decline in EUR/CHF might be completed and stronger rally should then be seen for a test on 1.5318 resistance.
In the bigger picture, with EUR/CHF still staying well below 55 weeks EMA, fall from 1.5880 is likely still in progress. Current decline should have a test on 1.4577 support first and break will target 2008 low of 1.4315. On the upside, break of 1.5138 resistance is needed to indicate that fall from 1.5446 has finished and revive the case that 1.4577 is still in progress. Otherwise, medium term outlook will remain bearish.
EUR/CHF 4 Hours Chart
EUR/JPY Daily Outlook
Daily Pivots: (S1) 132.53; (P) 133.16; (R1) 133.93; More.
EUR/JPY lost momentum again ahead of 134.54 resistance and the break of 132.34 minor support argues that rise from 127.50 has completed at 133.77 already. Intraday bias is flipped back to the downside and further decline should now be seen towards 126.88/127.50 support zone next. On the upside, above 133.77 will put focus back to 134.54 resistance and break there will indicate that whole fall from 138.47 has completed and the current rise from 127.50 could then extend further to upper end of medium term range near to 139.21 resistance.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already and down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 148.05; (P) 149.37; (R1) 150.12; More
GBP/JPY's break of 148.22 minor support suggests that an intraday top is in place at 150.68 and turns bias neutral. Nevertheless, another rise could still be seen as long as 146.03 support holds. Current rise from 139.26, which is treated as the third leg of whole consolidation from 139.69, could extend further and above 150.68 will target 153.21 resistance. However, break of 146.03 will indicate that rise from 139.26, as well as consolidation from 139.69, has possibly completed and will flip intraday bias back to the downside for retesting 139.26 support.
In the bigger picture, there is no change in the bearish view. Medium term rebound from 118.18, which is a correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Fall from 163.05 is expected to resume after sideway consolidation from 139.69 completes and should target a new low below 118.81. However, note that sustained break of 61.8% retracement of 163.05 to 139.26 at 153.96 will argue that fall from 163.05 has finished already and will in turn indicate that rise from 118.81 is still in progress to another high above 163.05 before conclusion.
AUD/USD Daily Outlook
Daily Pivots: (S1) 0.8996; (P) 0.9067; (R1) 0.9196; More
At this point, intraday bias in AUD/USD remains on the upside with 0.9075 minor support intact. Current development suggests that whole fall 0.9404 has possibly finished with three waves down to 0.8734 already. Further could now be seen to 0.9321 resistance first and bring will bring retest of 0.9404 high. On the downside, below 0.9075 will turn intraday bias neutral and bring retreat. But short term outlook will remain bullish as long as 0.8899 support holds.
In the bigger picture, strong rebound from 0.8734 dampens the bearish view that AUD/USD has topped out at 0.9404. Instead, it leaves the fall from 0.9404 to 0.8734 in three wave corrective structure, which in turn indicates that whole medium term rise from 0.6008 is still in progress. Break of 0.9321 resistance will confirm this case and target a test of 0.9404 first. Break will then target 08 high of 0.9849. On the downside, though, break of 0.8734 support will revive the case that whole medium term rise from 0.6008 has completed and will turn outlook bearish for deeper correction towards 0.7702/0.8626 support zone.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0336; (P) 1.0427; (R1) 1.0504; More.
As noted before, USD/CAD's correction from 1.0851 is still in progress and intraday bias remains on the downside for 1.0205 key support. Nevertheless, we'd still expect downside to be contained above there to conclude the correction and bring rise resumption. On the upside, above 1.0449 minor resistance will turn intraday bias neutral again. Break of 1.0576 will flip intraday bias back to the upside for 1.0774 resistance and break there will suggest that whole rise from 1.0205 has resumed for another high above 1.0851.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1123 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.
Sterling continues to be the weakest major currencies and drops broadly today on concern on the increasing debt level of the country as well as on report of a rift between UK Chancellor Darling and PM Brown over the UK deficit of GPB 178b. An article by FT said that Darling's position is that revenue from growth should be used to cut borrowings rather than increase spending. This was in contrast to Brown's comment that such extra revenues should be used to boost spending to reduce pain of looming cuts. Sterling is pressured across the board and the weakness is particularly apparent against commodity currencies, which are lifted by strength in gold and oil prices as well as stock market rallies.
GBPAUD is the weakest major cross this week and dropped over -2.8% so far. The cross is set to extend recent fall to 1.7326 support first and break there will confirm that the long term down trend that started at 2008 high of 2.7092 has resumed. In such case, GBP/AUD should target 61.8% projection of 2.0979 to 1.7326 from 1.8302 at 1.6044 next.
Elsewhere, Japanese yen is broadly firmer with support from repatriation flows. Dollar is trying to recover in early US session as commodities are losing some momentum. Crude oil edged higher to 81.99 earlier today but lacks follow through buying to send it through 82.0 resistance yet. On the other hand, gold also edged higher to 1129.6 earlier today bug some profit taking is seen there and pushes the precious metal back to 1120 level. Nevertheless, the correction in dollar index is still in favor to continue and another fall could be seen to 38.2% retracement of 74.19 to 78.45 at 76.82. But we continue to expected downside to be contained there and bring resumption of rise form 74.19.
On the data front, Eurozone CPI rose to 10 months high of 0.9% yoy in November, inline with consensus. Germany unemployment unexpectedly dropped by -3k in December but unemployment rate climbed to 8.1%. UK PMI construction improved slightly to 47.1 in December Canada IPPI and RMPI rose more than expected by 1.0% mom and 2.2% mom in November respectively.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4294; (P) 1.4375; (R1) 1.4493; More
Consolidation from 1.4217 is still in progress and with 1.4256 minor support intact, another rise could still be seen. However, upside is expected to be limited by 38.2% retracement of 1.5143 to 1.4217 at 1.4571 and bring resumption of fall from 1.5143. Below 1.4256 will flip intraday bias back to the downside and further break of 1.4217 low will target 38.2% retracement of 1.2329 to 1.5143 at 1.4068 next.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 resistance is needed to invalidate this view. Otherwise, outlook will now remain bearish.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0234; (P) 1.0327; (R1) 1.0391; More
With 1.0420 resistance intact, USD/CHF's correction from 1.0506 might still extend further and another fall cannot be ruled out. But after all, downside should be contained by 1.0175 resistance turned support to conclude the correction and bring resumption of rise from 0.9916. Above 1.0420 will flip intraday bias back to the upside for 1.0506 first. Break will confirm rally resumption to 1.0590 medium term support turned resistance next.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already, on bullish convergence condition in daily MACD. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1032). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 92.06; (P) 92.63; (R1) 93.08; More.
USD/JPY's fall from 93.20 extends further to 91.24 in early US session and remains soft. As noted before, rise from 84.81 might have completed at 93.20 already, after missing 100% projection of 84.81 to 90.75 from 87.36 at 93.30, on bearish divergence condition in 4 hours MACD. Intraday bias now remains on the downside for % projection of 84.81 to 90.75 from 87.36 at 93.30. Intraday bias is flipped back to the downside and further decline should be seen to 38.2% retracement of 84.81 to 93.20 at 89.99 first. Firm break there will affirm this case and target 87.36 support for confirmation. On the upside, above 92.15 will turn intraday bias neutral and put focus back to 93.20 resistance. Break there will indicate that rise from 84.81 may not be over and could still extend to resistance zone of medium term trend line resistance at 95.21 and 55 weeks EMA at 94.26
In the bigger picture, at this point, USD/JPY is still trading well below medium term trend line resistance at 95.21 and 55 weeks EMA at 94.26. Hence, there is no clear indication of reversal yet. A break of 87.36 support will confirm that rebound from 84.81 has completed. The three wave corrective structure will in turn support the case that whole fall form 124.13 is resuming for 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.6014; (P) 1.6127; (R1) 1.6197; More
GBP/USD's fall from 1.6237 continues today and the break of 1.6046 minor support suggests that recovery from 1.5829 has completed after hitting 38.2% retracement of 1.6875 to 1.5829 at 1.6229. Intraday bias is flipped back to the downside for retesting 1.5829 low first. Nevertheless, note that firm break there is needed to confirm fall resumption, otherwise, we'd expect some more sideway trading first. Break of 1.5829 will target key cluster support of 1.5706 next.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.
However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475 will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.
EUR/GBP Daily Outlook
Daily Pivots: (S1) 0.8888; (P) 0.8927; (R1) 0.8997; More.
With an intraday low in place at 0.8855, bias in EUR/GBP remains neutral for the moment. Nevertheless, note that another fall is still expected as long as 0.9053 resistance holds. Below 0.8855 should bring resumption of whole decline from 0.9410 and should target 61.8% projection of 0.9410 to 0.8833 from 0.9153 at 0.8786 next.
In the bigger picture, at this point, we're still favoring the case that medium term correction from 0.9799 has completed with three waves down to 0.8399 already. Rise from 0.8399 is possibly resuming the long term up trend. Hence, fall from 0.9410 is viewed as a correction only and should be contained by 0.8704 support. Break of 0.9053 will suggest that correction from 0.9410 has completed and rise from 0.8399 is resuming for a test on 0.9799 high first and then 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.
However, break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will argue that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes.
EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.4803; (P) 1.4846; (R1) 1.4884; More
With an intraday low in place at 1.4807, bias remains neutral for the moment and some consolidations could be seen in EUR/CHF. Nevertheless, break of 1.4988 resistance is needed to indicate that EUR/CHF has bottomed out. Otherwise, another fall is still in favor and break of 1.4807 will target 100% projection of 1.5138 to 1.4894 from 1.4988 at 1.4744 next. However, consolidating mild bullish convergence conditions in 4 hours MACD and RSI, break of 1.4988 resistance will indicate that recent decline in EUR/CHF might be completed and stronger rally should then be seen for a test on 1.5318 resistance.
In the bigger picture, with EUR/CHF still staying well below 55 weeks EMA, fall from 1.5880 is likely still in progress. Current decline should have a test on 1.4577 support first and break will target 2008 low of 1.4315. On the upside, break of 1.5138 resistance is needed to indicate that fall from 1.5446 has finished and revive the case that 1.4577 is still in progress. Otherwise, medium term outlook will remain bearish.
EUR/CHF 4 Hours Chart
EUR/JPY Daily Outlook
Daily Pivots: (S1) 132.53; (P) 133.16; (R1) 133.93; More.
EUR/JPY lost momentum again ahead of 134.54 resistance and the break of 132.34 minor support argues that rise from 127.50 has completed at 133.77 already. Intraday bias is flipped back to the downside and further decline should now be seen towards 126.88/127.50 support zone next. On the upside, above 133.77 will put focus back to 134.54 resistance and break there will indicate that whole fall from 138.47 has completed and the current rise from 127.50 could then extend further to upper end of medium term range near to 139.21 resistance.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already and down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 148.05; (P) 149.37; (R1) 150.12; More
GBP/JPY's break of 148.22 minor support suggests that an intraday top is in place at 150.68 and turns bias neutral. Nevertheless, another rise could still be seen as long as 146.03 support holds. Current rise from 139.26, which is treated as the third leg of whole consolidation from 139.69, could extend further and above 150.68 will target 153.21 resistance. However, break of 146.03 will indicate that rise from 139.26, as well as consolidation from 139.69, has possibly completed and will flip intraday bias back to the downside for retesting 139.26 support.
In the bigger picture, there is no change in the bearish view. Medium term rebound from 118.18, which is a correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Fall from 163.05 is expected to resume after sideway consolidation from 139.69 completes and should target a new low below 118.81. However, note that sustained break of 61.8% retracement of 163.05 to 139.26 at 153.96 will argue that fall from 163.05 has finished already and will in turn indicate that rise from 118.81 is still in progress to another high above 163.05 before conclusion.
AUD/USD Daily Outlook
Daily Pivots: (S1) 0.8996; (P) 0.9067; (R1) 0.9196; More
At this point, intraday bias in AUD/USD remains on the upside with 0.9075 minor support intact. Current development suggests that whole fall 0.9404 has possibly finished with three waves down to 0.8734 already. Further could now be seen to 0.9321 resistance first and bring will bring retest of 0.9404 high. On the downside, below 0.9075 will turn intraday bias neutral and bring retreat. But short term outlook will remain bullish as long as 0.8899 support holds.
In the bigger picture, strong rebound from 0.8734 dampens the bearish view that AUD/USD has topped out at 0.9404. Instead, it leaves the fall from 0.9404 to 0.8734 in three wave corrective structure, which in turn indicates that whole medium term rise from 0.6008 is still in progress. Break of 0.9321 resistance will confirm this case and target a test of 0.9404 first. Break will then target 08 high of 0.9849. On the downside, though, break of 0.8734 support will revive the case that whole medium term rise from 0.6008 has completed and will turn outlook bearish for deeper correction towards 0.7702/0.8626 support zone.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0336; (P) 1.0427; (R1) 1.0504; More.
As noted before, USD/CAD's correction from 1.0851 is still in progress and intraday bias remains on the downside for 1.0205 key support. Nevertheless, we'd still expect downside to be contained above there to conclude the correction and bring rise resumption. On the upside, above 1.0449 minor resistance will turn intraday bias neutral again. Break of 1.0576 will flip intraday bias back to the upside for 1.0774 resistance and break there will suggest that whole rise from 1.0205 has resumed for another high above 1.0851.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1123 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.
