• Euro gains stall ahead of 2009 highs; sidelined for now
• Dollar/Yen attempting to carve lower top ahead of next drop
• Cable could be in the process of carving right shoulder
• Dollar/Swiss still locked in choppy multi-day consolidation

7-21-09Classical-01

EUR/USD

EUR/USD - Price action on Tuesday has been less than compelling with the market pressing higher to 1.4280 before settling back in the 1.4200 area. From here, a likely retest of the 2009 highs at 1.4340 is seen with daily studies still showing plenty of room for additional upside. However, overall trade remains quite choppy and we would also not rule out the possibility for a push towards 1.4340 ahead of a topside failure that opens a bearish resumption back towards 1.3750 over the coming days. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL

USD/JPY

USD/JPY - Remains locked in a downtrend off of the yearly highs by 101.45 and a lower top is now sought out below 97.00, potentially at 94.80 ahead of the next drop. Look for the 20-Day SMA by 94.75 to cap any additional gains on a close basis ahead of a of a retreat back below 91.75 and towards the critical 87.15 matched trend lows over the coming days and weeks. Tuesday's bearish price action helps to reaffirm outlook. STRATEGY: STAND ASIDE; LOOK TO SELL

GBP/USD

GBP/USD -Despite the recent rally back into the 1.6500's we do not rule out the potential for a failure ahead of 1.6745 as we still hang on to the possibility for the formation of the right shoulder of a very loose and messy head & shoulders top. The bearish price action on Tuesday helps to reaffirm although the market still remains confined to the previous daily range. In the interim, we will remain sidelined until a clearer opportunity presents. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL

USD/CHF

USD/CHF - In the process of attempting to carve out a meaningful medium to longer-term base by 1.0590. However a period of choppy consolidation still needs to be convincingly broken to the topside to confirm basing prospects and open a recovery extension back towards the 1.1500 area. The key level to watch above comes in by the recent highs at 1.1025 and break of this level will help to confirm our bullish outlook. A break back under 1.0590 will however delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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