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The EURUSD is holding below triangle support.  The bear trend that took hold in July may resume now and lead to a drop below 1.23 within the next several weeks.

With price staying below the underside of the triangle support line, it is possible that the triangle is complete at 1.2932.  If so, then the EURUSD will likely break to a new low (below 1.2326) by the end of November.      

The larger USDJPY trend is down so strength should be sold.  It is unclear though whether or not the rally from 90.86 is complete.  As long as price remains below 100.60, bearish potential is significant.  Evidence that favors a new low (although not necessarily before a push above 100.60) is the momentum extreme (RSI) at 90.86.  As I’ve mentioned many times before, price extremes (highs and lows) rarely correlate with momentum extremes.  Instead, price extremes occur with momentum divergence.  Support begins at 96.       

Altering the count slightly, I now favor the idea that a flat is underway from 1.5259.  In flats, it is common for wave b to slip below the origin of wave a (1.5259 in the case).  Since the EURUSD may have completed its triangle, a drop below 1.5259 prior to formation of a more tradable low seems likely.

The USDCHF continues to press against a short term upward sloping resistance line.  Divergence with RSI on the daily (and weekly) warns of a pullback.  However, the USDCHF is now holding above a line from late 2005, which suggests a healthy bull and additional gains.  Given the bearish EURUSD pattern, additional USDCHF strength seems the more likely scenario at this point.  Round number resistance is at 1.20 and the August 2007 high is just above 1.22.    

A wave 4 low may be in place for the USDCAD.  A line drawn off of highs from late 2007 / early 2008 has provided support ahead of 1.13, which is the 4th wave of one less degree as well as the 50% retracement of the rally from .9817 (low of wave 2).  If a low is in place, then price should remain above 1.16.

The AUDUSD drop below .6544 on Friday warned us of a potential end to wave b within an a-b-c advance from .6007.  A push through .7022 would confirm that wave c is underway towards the measured objective at .7508 (100% extension).  Confidence is low given the strong dollar implications from patterns visible on other pairs.

A bullish outcome is possible as long as price is above .5742 but a potential head and shoulders top has formed, which warns of at least a drop below .5742.  

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.