Euro Locked in Consolidation; Stops Trailed to Cost (Daily Classical)

• Euro locked in bearish consolidation
• Dollar/Yen bouncing by lower end of well defined range
• Cable needs to break below 1.6185 to accelerate declines
• Dollar/Swiss clears key topside barriers to reaffirm basing prospects

EUR/USD

                                              [B]EUR/USD –[/B] The market   has been locked in some sideways trade since breaking below the neckline of a   major head & shoulders top formation on June 15. However, we classify the   recent price action as a bearish consolidation and look for an eventual break   lower below 1.3850 to confirm our bearish outlook and expose the measured   move h&s objective lower down by 1.3250. A lower top is now sought out by   Wednesday’s 1.4140 highs, with only a break above 1.4140 to negate and give   reason for pause. [B]Position: SHORT @1.4010 FOR OPEN OBJECTIVE; REVISED STOP   @1.4010.[/B]

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.4140

                                                                       R3

                                                                       6/24 high

                                                                                                                 1.4100

                                                                       R2

                                                                       Figure

                                                                                                                 1.4015

                                                                        R1 

                                                                       20-Day     SMA

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.3890

                                                                       S1

                                                                       6/24 low

                                                                                                                 1.3825

                                                                       S2

                                                                       6/22     low

                                                                                                                 1.3750

                                                                       S3

                                                                       6/16     low

USD/JPY

                                              [B]USD/JPY –[/B] For now,   it looks like the market is content on trading within a broad range, loosely   defined between the 94.00-100.00 area. With the price now gravitating to the   bottom of the range, there is scope for additional weakness down towards the   93.55-85 area. However, setbacks have been well supported inter-day by 95.00   and a bullish reversal day on Wednesday could warn of basing. Back above   97.20 will be required to take pressure off of the downside. [B]Strategy: STAND   ASIDE; AWAIT CLEARER SIGNAL. [/B]

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 97.90

                                                                       R3

                                                                       6/16 high

                                                                                                                 97.20

                                                                       R2

                                                                       6/19     high

                                                                                                                 96.60

                                                                        R1 

                                                                       6/25     high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 95.60

                                                                       S1

                                                                       6/25     low

                                                                                                                 94.90

                                                                       S2

                                                                       6/23     low

                                                                                                                 94.45

                                                                       S3

                                                                       6/1     low

GBP/USD

                                              [B]GBP/USD – [/B]The breakdown that we have been anticipating over the past several days   is taking longer to materialize, with the market caught in some sideways   consolidation. However, any rallies have been well capped below the 2009,   1.6665 lows, with failed attempts resulting in lower tops by 1.6620 and most   recently by 1.6605 on Wednesday. Key support comes in by the consolidation   lows at 1.6185 with a break and close below to accelerate declines towards   the critical 1.5800 neckline of what would be a very awkward topping   formation. Only back above 1.6600 would negate and give reason for shift in   outlook. [B]Strategy: SIDELINED FOR NOW; LOOK TO SELL.[/B]

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.6665

                                                                       R3

                                                                       6/3 2009     high

                                                                                                                 1.6620

                                                                       R2

                                                                       6/11     high

                                                                                                                 1.6470

                                                                        R1 

                                                                       6/25     high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.6185

                                                                       S1

                                                                       6/18     low

                                                                                                                 1.6085

                                                                       S2

                                                                       6/4     low

                                                                                                                 1.5940

                                                                       S3

                                                                       6/5     low

USD/CHF

                                                       [B]USD/CHF[/B] – We had been writing of a potential formation of an inverse head   & shoulders pattern formation on the daily, following the establishment   of a 2009 low by 1.0590 on June 2. Although this didn’t play out as we had   hoped, the market was successfully propped ahead of 1.0590 on Wednesday,   before a jackknife reversal back above the 1.1000 neckline. The result, has   been the formation of more of a double bottom-like pattern which confirms the   prospect for medium-term basing and opens the door for fresh upside over the   coming weeks back towards the 1.1500 area. Any setbacks are now expected to   be well supported in the mid-1.0700’s. [B]Strategy: SIDELINED FOR NOW; LOOK   TO BUY.[/B]

         

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.1270

                                                                       R3

                                                                       5/18     high

                                                                                                                 1.1130

                                                                       R2

                                                                       5/20     high

                                                                                                                 1.1060

                                                                        R1 

                                                                       5/21     high/50-Day

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.0920

                                                                       S1

                                                                       6/25     low

                                                                                                                 1.0760

                                                                       S2

                                                                       6/18     low

                                                                                                                 1.0650

                                                                       S3

                                                                       6/11     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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