• Euro reverse sharply intraday; short triggers at 1.3965
• Dollar/Yen stuck in tight inside day range
• Cable eyes test of psychological barriers at 1.6000
• Dollar/Swiss rallies fail to sustain; threatens hopes for recovery
EUR/USD - With the daily RSI rolling over from overbought, the risks from here are for a material pullback over the coming days. However, Tuesday's jackknife reversal off of the lows is concerning and we will need to see a break back below 1.3860 to get things once again moving back to the downside. Back above 1.4050-60 negates and exposes the 1.4100-50 area. Position: SHORT @1.3965 FOR A 1.3740 OBJECTIVE, STOP 1.4065. Stops to be trailed to cost on a break back below 1.3915. If 1.3915 not broken, position to be closed out at NY close (5pm NY time) on Tuesday.
USD/JPY - The market had been well offered over the past several weeks 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 was 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. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
GBP/USD - Any pullbacks intraday have been met with some very strong buying and the market continues to ignore daily overbought readings in favor of a retest on critical psychological barriers by 1.6000. Tuesday's price action initially looked quite bearish after breaking down to take out the previous daily low and end a sequence of 5 consecutive daily higher lows. However, the sharp rebound into the afternoon quickly dashed any hopes for a more significant retreat in favor of a push to fresh 2009 highs towards 1.6000. While we do anticipate a major pullback over the coming days, recent price action suggests that the time has not yet come for said correction. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
USD/CHF - Has been unable to hold onto the substantial gains from Tuesday with the market sharply reversing back towards daily opening levels in the lower 1.0800's. This keeps the bearish trend intact with only a break back above 1.0930 to now negate and open a more significant corrective rebound. A break below 1.0800 exposes the 2009 lows from early January at 1.0610. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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 firstname.lastname@example.org and you will be added to the distribution list.
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