• Euro still chopping around below 2009 lows; remain sidelined
• Dollar/Yen consolidates ahead of next drop
• Cable sell recommendation issued on rallies above 1.6500
• Dollar/Swiss sees more of the same uneventful price action
EUR/USD – Could be showing signs of potentially rolling over with Tuesday’s doji formation followed by some bearish price action on Wednesday. The break below 1.4165 ends a string of consecutive daily higher lows and a lower top below 1.4340 at 1.4280 can not be ruled out. Nevertheless, it is too early to tell at this point and we would also not at all be surprised to see a full retracement back to challenge the 2009 highs. We remain sidelined until a clearer opportunity presents. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
USD/JPY – Remains locked in a downtrend off of the yearly highs by 101.45 and a lower top is now sought out below 97.00, potentially at 94.80 ahead of the next drop. Look for the 20-Day SMA by 94.50 to cap any additional gains on a close basis ahead of a of a retreat back below 91.75 and towards the critical 87.15 matched trend lows over the coming days and weeks. Back above 94.80 delays but does not negate outlook. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD –Despite the recent rally back into the 1.6500’s we do not rule out the potential for a failure ahead of 1.6745 as we still hang on to the possibility for the formation of the right shoulder of a very loose and messy head & shoulders top. The bearish price action on Tuesday strengthens our case and we will look to sell into a rally above 1.6500 in the final hours of Wednesday trade. STRATEGY: SELL @1.6510 FOR AN OPEN OBJECTIVE, STOP @1.6675. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON WEDNESDAY
USD/CHF – In the process of attempting to carve out a meaningful medium to longer-term base by 1.0590. However a period of choppy consolidation still needs to be convincingly broken to the topside to confirm basing prospects and open a recovery extension back towards the 1.1500 area. The key medium-term level to watch above comes in by the recent highs at 1.1025 and break of this level will help to confirm our bullish outlook. In the interim, back above 1.0720 will help to take pressure off of the downside. However, a break back under 1.0590 will delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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