• Euro exceeds 70 on daily RSI; poised for needed pullback
• Dollar/Yen reverses sharply to almost fully negate Friday’s price action
• Cable gains unrelenting as the market approaches 1.6500; RSI above 80
• Dollar/Swiss setbacks stall just shy of 2009 lows
EUR/USD
[B]EUR/USD –[/B] Could finally be showing signs of a top with the daily RSI crossing above 70 and the market reaching the 78.6% fib retracement off of the major 1.4720-1.2455 move at 1.4235. A daily close near or below 1.4160 would provide added confirmation and we would look to build shorts at current levels in anticipation of a major pullback. [B]Strategy: SELL @1.4145 FOR A 1.3930 OBJECTIVE, STOP 1.4260. [/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.4435
R3
12/17 high
1.4365
R2
12/29 high
1.4250
R1
6/1 09 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.4100
S1
6/1 low
1.3940
S2
10-Day SMA
1.3925
S3
5/29 low
USD/JPY
[B]USD/JPY –[/B] The market has been well offered over the past several weeks but setbacks have now stalled out just shy of next key support by 93.55 from March, which guards against the critical 87.15 multi-year trend lows. Friday’s bearish price action has been nearly negated on Monday to suggest that an interim base is in place by 93.85 ahead of fresh upside beyond 97.25. Only back under 94.45 shifts focus back to downside. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
98.30
R3
5/8 low
97.85
R2
5/12 high
97.25
R1
5/28 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
95.55
S1
5/27 high
95.00
S2
5/29 low
94.45
S3
6/1 low
GBP/USD
[B]GBP/USD – [/B]We have been looking for opportunities to be short of this pair as well, and have established a fresh short on Monday after gains showed signs of stalling above 1.6400. Shorter-term, hourly studies are overbought and the daily ATR (Average True Range) has already been well exceeded on the day, to make the counter-trend short position very attractive on an intraday basis. Longer-term, the market has now retraced to the 38.2% fib retrace off of the major multi-year high-lows and we would expect to see some form of capitulation at current levels in light of the major retracement level. Finally, the daily RSI has broken above the 80 level which is now severely overbought and warning of a much needed and healthy corrective pullback. We have left our objective open and will be looking for an RSI move back towards 70 (currently 81) over the coming days. [B]Position: SHORT @1.6407 FOR AN OPEN OBJECTIVE, STOP @1.6687. [/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.6675
R3
10/30 high
1.6600
R2
Figure
1.6500
R1
Psychological
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.6300
S1
Figure
1.6200
S2
5/29 high
1.6160
S3
6/1 low
USD/CHF
[B]USD/CHF[/B] – After finally trading down to 30 on the daily RSI, the market could be looking for a much needed and healthy corrective rally. Setbacks on Monday stalled out just shy of the 2009 lows by 1.0610 and the market has since recovered back to daily opening levels by 1.0670 to potentially set up a doji close. Look for a break back above 1.0725 to accelerate gains and confirm short-term basing, while below 1.0610 opens deeper setbacks towards next key support by 1.0370, the late December lows. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.0860
R3
5/29 high
1.0805
R2
5/28 low
1.0725
R1
6/1 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.0620
S1
6/1 low
1.0610
S2
1/2 09 low
1.0485
S3
12/30 low
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com. If you wish to receive Joel’s reports in a more timely fashion, e-mail [email protected] and you will be added to the “distribution” list.
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