USD Setbacks Classed as Corrective (Daily Classical)

• Euro consolidates ahead of next drop; sell rallies
• Dollar/Yen fails to extend gains for now; looking to buy dips
• Cable rallies sharply from lows; still classed as corrective
• Dollar/Swiss higher low sought ahead of fresh upside

EUR/USD

                                               [B]EUR/USD –[/B] The market   has clearly broken down from a bull channel that had defined trade for the   past several days, to confirm a shift in the overall structure. Deeper   setbacks are now seen ahead, with any rallies expected to be limited to the   previous trend-line support which comes in by 1.4050. Our 1.4210 short from   last week met its objective at 1.3900 on Monday, and we will look to re-sell   into rallies. [B]Position: SHORT FROM 1.4210 MET OBJECTIVE @1.3900, STAND   ASIDE.[/B]

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.4270

                                                                       R3

                                                                       6/5     high

                                                                                                                 1.4070

                                                                       R2

                                                                       6/4     low

                                                                                                                 1.4005

                                                                        R1 

                                                                       6/8     high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.3805

                                                                       S1

                                                                       6/8     low

                                                                                                                 1.3790

                                                                       S2

                                                                       5/28     low

                                                                                                                 1.3730

                                                                       S3

                                                                       5/21     low

USD/JPY

                                               [B]USD/JPY –[/B] What a   difference a day makes. We had established a short trade on Friday with the   market so heavily overbought intraday and testing some shorter-term   trend-line resistance off of the 101.45 2009 highs. However, gains continued   to extend into the afternoon, resulting in a parabolic rally that had closed   above the trend-line. This was not the outcome we were looking for and as a   result, we exited the trade this morning on the pullback into the low 98.00’s   for a small loss. We view the close above the trend-line on Friday as   significant, with the move likely signaling additional upside over the coming   weeks, back towards next key longer-term falling trend-line resistance just   over 100.00. As such, we will now look for an opportunity to reverse and get   long on a dip below 98.00 on Monday. We will use the 50-Day SMA as a point of   entry. [B]Strategy: BUY @97.60 FOR A 100.00 OBJECTIVE, STOP @96.40.   Recommendation to be removed if not triggered by NY close (5pm ET) on   Monday.  [/B]

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 101.45

                                                                       R3

                                                                       4/6     high

                                                                                                                 99.75

                                                                       R2

                                                                       5/7     high

                                                                                                                 98.90

                                                                        R1 

                                                                       6/5     high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 98.00

                                                                       S1

                                                                       Figure

                                                                                                                 97.25

                                                                       S2

                                                                       5/28     high

                                                                                                                 97.00

                                                                       S3

                                                                       6/4     high

GBP/USD

                                               [B]GBP/USD – [/B]The latest round of pullbacks off of the 2009 highs by 1.6665 from the   previous week have stalled out by 1.5800 thus far ahead of the latest minor   bounce. The result is a bullish dragonfly doji/hammer formation with the   market trading back to and slightly above daily opening levels. However, any   upside is seen limited, with the market only stalling out, in our opinion,   for a minor corrective bounce. There is good former support in the 1.5800   area and the current bounce is to be expected for now. Look for additional   rallies to be well capped by 1.6245 ahead of the next drop below 1.5800   towards 1.5500. Only back above 1.6245 delays. [B]Position: SHORT FROM 1.6407   BOOKED PROFIT AT 1.5870, STAND ASIDE. [/B]

         

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.6435

                                                                       R3

                                                                       6/4 high

                                                                                                                 1.6245

                                                                       R2

                                                                       6/5     high

                                                                                                                 1.6085

                                                                        R1 

                                                                       6/4 low

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.5940

                                                                       S1

                                                                       6/5     low

                                                                                                                 1.5800

                                                                       S2

                                                                       6/8     low

                                                                                                                 1.5755

                                                                       S3

                                                                       5/22 low

USD/CHF

                                               [B]USD/CHF[/B] – Setbacks have been very well supported by 1.0590 and the market has   reversed course to suggest that a base could now be in place. Daily studies show   plenty of room to run with Monday’s break back above 1.0955 to accelerate and   open a fresh upside extension potentially back towards 1.1270 over the coming   days. Look for setbacks to now be well supported in the 1.0800 area. [B]Strategy:   SIDELINED; AWAIT CLEARER SIGNAL.[/B]  

         

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.1130

                                                                       R3

                                                                       5/20     high

                                                                                                                 1.1055

                                                                       R2

                                                                       5/21     high

                                                                                                                 1.0990

                                                                        R1 

                                                                       6/8     high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.0835

                                                                       S1

                                                                       6/8     low

                                                                                                                 1.0765

                                                                       S2

                                                                       6/4     high

                                                                                                                 1.0660

                                                                       S3

                                                                       6/5     low

[B]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[/B] [B][email protected][/B] [B]and you will be added to the [/B][B]“distribution” [/B][B]list.[/B]

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