• Euro well supported on dips; eyes 2009 highs
• Dollar/Yen well supported ahead of 93.55
• Cable eyes test of psychological barriers at 1.6000
• Dollar/Swiss approaching 78.6% fib retrace of major move
EUR/USD
[B]EUR/USD –[/B] With the daily RSI above 70.0 and overbought, the risks from here are for a material pullback over the coming days. However, the 2009 highs are just above at 1.4060 and we would expect to see this level to be taken out before considering the start to a major pullback. The market is currently trading in an inside day on the lightened Monday trade. The key level to watch below comes in by 1.3890 with a break to accelerate declines and confirm short-term topping. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL [/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.4150
R3
12/31 high
1.4060
R2
1/2 09 high
1.4050
R1
5/22 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.3925
S1
5/21 high
1.3890
S2
5/22 low
1.3725
S3
10-Day SMA
USD/JPY
[B]USD/JPY –[/B] The market has been well offered over the past several days 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 bullish close has been followed by some upside on Monday to break a sequence of consecutive daily lower highs and lower lows. This could now suggest that an interim base is in place by 93.85 ahead of a bounce back towards 96.70 over the coming days. Below 93.85 negates. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
96.70
R3
5/19 high
96.25
R2
5/20 high
95.40
R1
10/100 SMAs
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
94.40
S1
5/25 low
93.85
S2
5/22 low
93.55
S3
3/19 low
GBP/USD
[B]GBP/USD – [/B]Daily studies are highly overbought and we are looking to establish a short trade in anticipation of a major corrective pullback over the coming days. The pair has extended to fresh 2009 highs by 1.5950 on Friday ahead of the latest minor setbacks, but we still see scope for a push above major psychological barriers at 1.6000 before initiating a counter-trend short trade. Key support now comes in by 1.5755 with a break required to confirm short-term topping. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL. We recommended a sell @1.6020 but do not expect this to trigger by 5pm NY close. [/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.6110
R3
11/4 high
1.6030
R2
11/6 high
1.5950
R1
5/22 09 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.5835
S1
5/25 low
1.5755
S2
5/22 low
1.5700
S3
Figure
USD/CHF
[B]USD/CHF[/B] – Continues to trade with a heavy tone into the new week with the market on the verge of putting in the 5th consecutive daily lower high. Daily studies show room for a little more weakness but ultimately, the risks from here are for a major upside reversal over the next few days. A break below 1.0810 exposes next key support by 1.0715 which represents the 78.6% fib retracement off of the 1.0370-1.1370 move. Back above 1.0940 would be required to open bullish reversal. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.1165
R3
5/19 high
1.1130
R2
5/20 high
1.1055
R1
5/21 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.0810
S1
5/22 low
1.0715
S2
78.6% fib
1.0610
S3
1/2 09 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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