Another day, another official attempting to talk the currency in a particular direction. This time it’s the ECB which proclaimed too strong of a Euro would harm the recovery in the crisis states. Could have an effect on the charts, could not. Let’s take a look.
EUR/AUD has seen a significant decline in the last number of years, but it very well may have put in a bottom in the middle of 2012. The above chart is a weekly look at the pair, and it shows that we are at a very key level. The 2011 range indicated by the two yellow horiziontal price lines is now being tested from the bottom. The circled ‘destruction’ bar is the point from which the price first broke decisively from the range. it was then tested in 2012. Right now, price is at that area once again, and a decisive push higher may not only vault us back into the 2011 range, but represent the early stages of a trend reversal. Note that there is a potential inverse head and shoulder at the bottom, which now would need a break higher to confirm.
Looking at the hour chart now, you can see that the price action has formed a triangle, further setting the stage for a big move one way or the other.
1 hour chart. Euro/Cable seems to be in the midst of a correction period downward. The top at 0.8715 to the low at 0.8450 is a possible A wave downward, in Elliott Wave parlance. From 0.8450 to the current position might very well be a B wave, which leaves a C wave left to make its way lower from here. The ECB noises may very well cancel out the noises made in the UK inflation report earlier in the morning, which sent the pound lower.
Hour chart. As discussed on Monday, Euro/Yen is still in the process of testing the 2009 range it broke out from. The yellow price line signifies the bottom of that range. Price action has been choppy, but since it initially entered the range, it has not made a new high, which suggests a correction may continue.
4 hour chart. From the looks of it, the EUR/USD still looks like it is in correction, within the context of a move higher. A move towards the red trendline would seemingly take price to 1.33, and anywhere from there to 1.3250 would need to see buyers to maintain the trend higher.
Like the Euro/Yen, Pound/Yen hasn’t quite made new highs and the price action has been quite sloppy for the last few trading days. The key for the extent of the reaction seems to be the yellow line at 145. As you can see, it has reacted from that area multiple times, and it may crack through on this occasion. From there, a move to 144 in quick order should be on the cards, and that is where the real support is in my view.
4 Hour chart here. Crude looks poised to break out of the $98.25 region which are the highs from last week, and should it do so, a trip to $100 may happen quite quickly. Given the fact that we are in an overall corrective triangle pattern as I discussed on Monday, such a move to the $100 level may be exhaustive, at the high boundary of the triangle.