Euro Testing Channel Resistance (Daily Classical)

• Euro testing trend-line
• Dollar/Yen propped
• Cable rallies well offered
• Dollar/Swiss considers 1.0370

– Has extended gains to now post fresh 2009 highs beyond 1.4500 thus far by some trend-line resistance off of the early June highs. There is no significant topside resistance now until 1.4720 and scope does exist for a move back to this level over the coming sessions. As per the usual however we continue to look for opportunities to sell into rallies, with the hope of catching a sizeable corrective pullback. A short was established on Tuesday at 1.4525 and stops are now at cost to eliminate risk. Should this level be taken out, there is the potential for gains to extend to test next figure resistance by 1.4600 today. Anything above 1.4600 is considered an ideal short-term sell entry on Wednesday. We will also pay close attention to the daily RSI which is approaching overbought readings by 70. Anything above 70 will intensify our bearish outlook. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES


USD/JPY – Tuesday’s sharp setbacks once again put the focus on the downside with the market still eyeing a break of the July trend lows at 91.75. While the overall structure is grossly bearish, we are not inclined to sell the pair at current levels which are already close to oversold and therefore not offering a compelling risk/reward trade. Instead, we will wait for a break below 91.75 to potentially catch a playable long trade in anticipation of a correction, or wait for another rally from current levels to look to sell back into the strong downtrend. Key resistance above comes in by 93.30 with a break of this level now required to take the pressure off of the downside. [B]STRATEGY: STAND ASIDE FOR NOW; AWAIT CLEARER SIGNAL.


GBP/USD – Bulls have no reason to get too excited at current levels with the market still very well confined to a multi week range below the 2009 highs. We continue to hold onto a more bearish bias with any rallies viewed as a good sell opportunity in anticipation of a major topping formation on the daily chart that ultimately could project declines back towards the 1.5000 area over the coming weeks. Nevertheless, we will proceed with caution and only look to establish short positions on overbought intraday readings. With a daily ATR of nearly 200 points, an ideal level to look to sell on Wednesday comes in by 1.6685 which also directly coincides with the 61.8% fib retracement off of the 1.7045-1.6115 move. However, we will not issue a formal recommendation at this time and will stand aside. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES


USD/CHF – Tuesday’s break below critical psychological barriers at 1.0500 definitely delays are constructive outlook and potentially now exposes next key support from December 2008 at 1.0370. We still do not recommend selling at current levels and instead will look for a dip towards 1.0370 to look to establish a counter-trend long trade. 1.0370 should offer strong support and a move to this level over the hours will also more likely than not result in a daily RSI by the oversold 30 level. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS

Written by Joel Kruger, Technical Currency Strategist for
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