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Failing to break its overnight high in US trading, a larger US dollar correction may finally be underway.  The USDJPY looks like the most bang for the buck right now.

3 wave movements dominate right now.  The rally from 1.4631 is in 3 waves as is the decline from 1.4908.  These waves are most likely waves A and B of either a flat or triangle (yes, wave B can come under the origin of A in a triangle).  The path for the next few days should be higher in wave C of either the triangle or flat.  1.4750 is resistance.

The USDJPY simply has the ‘look’ of a top.  While a spike through 109.92 is certainly possible based on short term structure, the next big move is probably down from the triple top shown on this chart.  A break below 108 would confirm the top.  It is worth mentioning that the 3 month volatility is at its lowest since the last late December.  From December 27 to January 23, the USDJPY fell nearly 1000 pips.  There are additional reasons to be bearish USDJPY.

The GBPUSD is in the same position as the EURUSD.  That is, recent movements are in 3 waves.  The rally from 1.8512 and subsequent drop from 1.8793 are either the first two waves of a flat or a triangle.  Either way, the near term direction is up to above 1.8589.  Short term resistance is at 1.8471.  A drop below 1.8325 would render these counts invalid.

The USDCHF is in the same position as the EURUSD and GBPUSD (but as the inverse).  The recent 3 wave movements are either the first 2 legs of a triangle or flat.  Expect weakness below 1.0922.

This is a potential count, which is bullish and suggests a new high (above 1.0726).  The decline from 1.0726 can be counted as a W-X-Y complex correction.  Rallying through 1.0561 would bolster this bullish count.

Price tested and bounced from .85 this morning but the rally could be just a 4th wave that will lead to a new low to complete 5 waves down from .8813.  It is also possible that a temporary low is in place at .8493 as the drop from .8813 could be a leg of a triangle or flat (similar to the EUR, GBP, and CHF).  A rally above .8575 would favor the latter.  

The NZDUSD rally from .6824 and decline from .7215 are either waves A and B of a flat or triangle.  The short term direction is most likely up until at least .71 in wave C of a triangle.  In the case of a flat, price would exceed .7215 before rolling over.

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.