Viking's FX-Market Update #12

Long awaited update of the major FX baskets, where we may have indications of a few reversals coming up.

As I haven’t been looking at the FX baskets for a while, and especially not the Monthly long term views, I will go through them and try to keep it fairly short.

JPY
Let’s start with the Japanese Yen, where it surprises me to still see many bullish calls (xxx/jpy bearish), more or less from what I recon that it has lost so much value so now it must be time for it to turn around soon.

Well, look at the Monthly JPY basket chart above, does it look bullish to you? Of course, there will be days when the Yen seems to have found its mojo again, but from what I can see that’s just opportunities to sell the JPY and will be for some time still.

EUR
I have been positively surprised by the Euro’s resilience, after I thought it was done with the strong rejection back in April. Well, after a month of indecision (doji) we saw it push higher once again and to a new high. Now we have one of those rejections once again in November, not as strong as we seen before, but it came in response to a try pushing outside of the channel it started to build back in 2012.

It is possible that we at least see a pause here as we have almost an exactly identical length of the last 2 waves higher across the channel. At the same time, I have to admit I’m not 100% confident in my triangle count above justifying a reversal lower towards the other side of the channel. The count below, with a running flat as wave B is indeed a strong contender. That would imply a continuation higher still, maybe to test the highs from back in 2009.

NZD
The Kiwi had an interesting week bringing November to a conclusion and while this Hammer candle isn’t as powerful in sight as the one from April, it comes together with another powerful ingredient thrown in by RBNZ.

A probable end of cycle for rate cuts as a rocket engine makes it very probably that we will see NZD go much higher from here. Then it doesn’t mater if it is wave I & II we have as the framing of major high and low, it can as well be cycle was A & B, as the next wave is likely to stretch beyond that as time goes by. Just give it some time and position accordingly.

AUD
The Aussie is in a somewhat similar situation as the Kiwi, in that the RBA also seems to have thrown their cut ideas on the couch. Of course, it’s early days still and for both of these so called risk currencies to get real legs a general improvement in the risk sentiment is needed.

This can be seen in that there is still some resistance left for AUD to push through, before it can get back into a larger pitchfork channel that could guide it higher.

CAD
The Loonie may be on its way to steer free of an Ending Diagonal but it’s still not clear sailing just yet.

If we get a better risk sentiment it will certainly be positives also for CAD, but at the same time, its major correlating asset class Oil seems to be in trouble, medium to longer term at least and that may drag it down to test the bottom once again. No, CAD doesn’t look like an interesting play here.

GBP
Pound Sterling has been struggling with the Brexit referendum resistance for most of the year, even if little has been said about it on the wire, where the finger instead has been pointed to the UK Labour government and the Chancellor Reeves and here budget as major culprits.

The Basket chart show it as it is, without any doubt. Interestingly, GBP was struggling against a lot of head wind during November, much in fearful anticipation of the waiting autumn budget. Now that’s in the past and once again it has shown that fear has no real meaning and value, and should be challenged/faded. All about timing, of course.

So, despite all fears, Sterling hasn’t collapsed but instead showed up strong knocking on the door once again, and maybe maybe it is time for the next phase as we approach the end of the year.

CHF
The Swiss Franc ended November by closing out its ninth (9) strait green month - an impressive performance and a voice on the X-platform expressed it quite elegantly be saying that CHF had reached sentience. Although very describing also meant somewhat ironically I assume, but also true. The Swissy has reached well beyond worldly existence lost in the other sphere of Investormania.

Nevertheless, this is also an Evening Star candle pattern top and while I’m very careful with not taking out something in advance, I think it’s high time for CHF to come back down to Earth.

USD
I have already posted DXY as part of my earlier Market Update but will still post the USD Basket here as well, with a warning.

It’s quite possible this count is wrong as I just changed it by replacing V with III on the Oct-22 high, basically because what has played out since that high doesn’t give me the impression as the start of a reversal lower. After all, this chart is still in an uptrend with higher highs and higher lows and as long as the March-21 low hasn’t been broken that remains the case.

I have to give it more though as it should probably be labeled differently and maybe not in 5 waves at all. Bottom line, this is not DXY, which is heavily Euro weighted, but I think it would make sense if it came down to tested the channel bottom here as well.

BTW, if you don’t do so already, you should follow me on X @vikingew for more spontaneously posted updates of both FX and other instrument’s charts.