Both These Pairs Have Good Elliot Wave Patterns
Rather
than focusing on the current macro picture,
which tends to be the focus of this commentary with technical overlaid on top of
that, let’s review some charts that are of interest purely from a technical
standpoint.
Both the
EUR and CHF are exhibiting some good Elliot Wave patterns in conjunction with
some of the traditional indicators I use, mainly trend-lines and stochastics.
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While
these patterns are very tempting, in the current environment we still lack a
catalyst that will break the current trading range. Most FX activity recently
has been by speculators, which has introduced a great deal of knee-jerk
reactions to the constant stream of economic data. This has forced us to rely
less heavily on the daily patterns in terms of entry points and drop our
analysis down to 60-minute charts, while still maintaining a perspective on the
daily time frame.
 
The CHF
on a 60-minute time frame is currently completing a wave 4 bottom and looks
poised to test 1.2735 and 1.2792.Â
The
pattern on the 60-minute EUR is less clear at present. Current price action is
contained at 1.2220, and there are some minor divergences on the stochastics,
while RSI and OBV confirm the recent impulsive move off Wednesday/Thursday lows
(1.2130).
Again,
economic data will likely be the only thing that allows for follow through
today. With University of Michigan Sentiment due out at 6:45 AM PDT it will
bear watching. Consensus estimates are for a reading of 98. Like all other
data releases currently, these are where short-term reactions can be exploited.Â
Look to buy the EUR on any significant downside surprises in this number and
sell the EUR on any upside surprises. Sounds remedial, but in this environment,
it is the one edge that still seems viable.
We
continue to favor longs in the NZD/USD as well, not only from a technical
standpoint, but also due to our studies showing an inverse relationship to
10-year treasury
yields which continue lower this AM to 4.07%. The Michigan data will by key for
the bond market. Look for sustained moves above .6623 and .6640 to allow for
upside targets of .6747 if yields fall further towards 4% today.
As
always, feel free to send me your comments and questions.