Euro Still Disregards Overbought Readings (Daily Classical)

• Euro to fresh 09 highs
• Dollar/Yen double bottom
• Cable rallies to stall
• Dollar/Swiss focused on 78.6%

EUR/USD[/B] – The daily RSI is now above 70 warning of a near-term pullback. But the market still shows willingness to race higher after taking out 1.4720 on Wednesday. Next key resistance comes in by 1.4870, with any gains on Thursday seen stalling out well shy of this level in the 1.4825 area. We do not recommend selling at current levels and instead will continue to look for overdone intraday rallies to consider a short trade. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES[/B]

[B]USD/JPY[/B] – Just missed our buy entry at 90.00 on Wednesday with the market stalling shy of the psychological support before racing higher back above 91.00. While the overall trend remains grossly bearish, there is some scope from here for a decent corrective bounce back towards 93.30. A break above 91.65 will be required to confirm recovery bias and trigger a double bottom exposing 93.30. Back under 90.00 negates. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES [/B]

[B]GBP/USD [/B]– We continue to maintain a sell on rallies approach to this market with the view that the pair has made a meaningful high above 1.7000 this year. The ensuing price action is more choppy consolidation than any threat of a fresh upside extension beyond 1.7000. Arguably, the market could even be in the process of carving the right shoulder of a head & shoulders top that ultimately would project setbacks to 1.5000 over the coming weeks. Last Friday’s 1.6745 high is expected to cap any additional intraday rallies, while back under 1.6400 should accelerate declines. Only a close above 1.6745 would give reason for concern. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES[/B]

[B]USD/CHF[/B] – The recent break below 1.0370 now opens the door for a deeper drop into the 1.0200’s over the coming hours. However, daily studies are now oversold and we would recommend looking to take advantage of any dips towards the 1.0200 figure to establish a very playable long trade. The 1.0200 figure coincides with the 78.6% fib retracement off of the major 2008 low-highs and should serve as a formidable level to prop any additional declines. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS[/B]

[B]Written by Joel Kruger, Technical Currency Strategist for
If you wish to receive Joel’s reports in a more timely fashion, e-mail [/B][B][email protected][/B] [B]and you will be added to the [/B][B]“distribution” [/B][B]list.[/B]

Visit the DailyFX Forex Stream for Real-Time News and Market Updates