• EUR/USD 1.1040 is big
• USD/JPY responds to the May low (105.50)
• USD/CHF weekly key reversal

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—Quarterly charts and comments

EUR/USD

Weekly

Chart Prepared by Jamie Saettele, CMT

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-Recent weekly analysis noted that “the near term EUR/USD breakdown could certainly ‘launch’ a more important move but there are several levels to pay attention to in the event that this move is a trap. The notable level to watch is the 30 year trendline near 1.0880. The other spot to watch is 1.0820; the May and July 2015 lows…there is a history of near term capitulation and even bigger reversals towards the end of October. Examples include 2013, 2011, 2009, 2008, 2004 and the all-time low in 2000. In fact, the 2004 market (flipped actually…it’s displayed on the chart above) might be the best template for what is about to transpire (see here).” The only thing to add here is that the ECB spike high at 1.1039 is seen as important. That level is joined by the line that connects the 2016 lows (neckline). Watch that spot for resistance. A settle above would indicate a change in behavior, especially since the 30 year trendline held again.

As always, define your risk points (read more about traits of successful traders here).

-For forecasts and 2016 opportunities, check out the DailyFX Trading Guides.

GBP/USD

Weekly

Chart Prepared by Jamie Saettele, CMT

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-A re-test of the trendline that extends off of the 1993 and 2001 lows would result in a move back near 1.2900. Price action since the 10/7 crash could be forming a base to initiate a move towards there but it’s still early. On a longer term basis, “there may be no real support until early 2017 based on the 96 month (8 year) cycle low count. That cycle count is shown on this chart. A price level of interest is where the decline from the 2014 high (1.7191) would be equal to the 2007-2009 decline in percentage terms (36% declines). The math produces 1.0970.”

AUD/USD

Weekly

Chart Prepared by Jamie Saettele, CMT

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-AUD/USD continues to tap dance at the top of its year-long range. Since August, AUD/USD has failed just above .7700 6 different weeks. The market clearly has a vested interest in .7700. The outlook is murky until the level breaks. To review, “AUD/USD remains capped by major slope resistance after finding low earlier in the year at ‘macro’ slope support (see the link to the quarterly charts at the beginning of the report). The bullish breakout level (weekly closing basis) is .7719. Strength through there would signal that a basing process is complete for a move to the mid-.80s. Until then, scope remains for additional range trade with support near .7380 (October and December 2015 highs).”

NZD/USD

Weekly

Chart Prepared by Jamie Saettele, CMT

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-There is no change to the weekly analysis as NZD/USD realized its smallest non-holiday weekly range since May 2014 (1.06%). 1985-1993 line has been resistance since June. In fact, Kiwi was never able close above the line on a weekly basis (plenty of wicks above). The January-May trendline held on the first test but failure near the month open (and 55 day average) warns of something brewing on the downside. A break below .6950 would trigger a head and shoulders pattern AND a 14 month bearish wedge pattern.

USD/JPY

Weekly

Chart Prepared by Jamie Saettele, CMT

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-Recent updates have noted that “the area around 100 is clearly important (see lows in 1999, 2000, 2005, 2014, and the 2009 high)…don’t be shocked if USD/JPY surprises higher in Q4…the big test for this rally is the May low at 105.44 (same area code as the January 2014 high and October 2014 low). Pattern wise, trade since the Brexit low may be a triangle (currently rallying into a c wave top).” USDJPY traded into the ‘big test’ level, printing 105.53 on Friday before turning sharply lower. The Friday reversal warns that the rally has exhausted.

USD/CAD

Weekly

Chart Prepared by Jamie Saettele, CMT

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-Parallels to the trendline that originates in 2012 have identified some big turns; the May 2015 low, May low and high, and the July high. The May and July high were actually identified by the parallel from the 2011 high (former channel top). USD/CAD is back at the parallel again so pay attention! Failure here could be a big deal and lead to the previously suggested wedge breakdown. A push higher would expose a cluster of technical levels in the 1.3800s. Extremely narrow ranges sometimes indicate the proverbial ‘calm before the storm’. This week’s range is the smallest non-holiday range since the week that ended 12/4/2015. A trending move began the next week.

USD/CHF

Weekly

Chart Prepared by Jamie Saettele, CMT

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-The pop and drop on the November 2015-January trendline may signal a bull trap and allow the downside to win out. Recent comments remain valid. “USD/CHF remains subdued but its time will come (perhaps this quarter given the time symmetry described here). The shape of trade since 2011 is a wedge. Wedge support has held throughout 2016, thwarting the bear camp time and again. Near term, the rate continues to trade at resistance from the June high and November-January trendline. A push through there wouldn’t mean a whole lot in the grand scheme of things…the more important spot to pay attention to is the longer term parallel that ticked the November 2015 high. That line is near 1.0040.”