•Euro adheres to falling trend-line resistance; h&s back in play
•Dollar/Yen presses lower; eyes 93.55-85 further down
•Cable still very well capped by 1.6500; remain bearish
•Dollar/Swiss hanging on to inverse h&s prospect
EUR/USD - Although the head & shoulders top is taking its time to play out, the overall structure still looks quite toppish and we anticipate a fresh drop below 1.3750 over the coming days to expose the measured move objective by 1.3250 further down. The latest price action confirms with the market rallying but stalling after kissing falling trend-line resistance off of the 1.4340, 2009 highs and carving out a fresh lower top. Only back above 1.4015 gives reason for pause. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/JPY - Price action in the pair has been extremely choppy with the latest sharp pullback forcing a shift in our bias and suggesting that deeper setbacks are now on the horizon. Look for a break below 95.55 over the coming sessions to open a more significant drop towards the 93.55-85 area which has offered itself as a solid support zone in 2009. Back above Friday's 97.20 highs will be required to delay bearish outlook. Strategy: STAND ASIDE; AWAIT CLEARER SIGNAL.
GBP/USD - The double top scenario that we had anticipated in the previous week has failed to play out as of yet with the latest bout of consolidation threatening the bearish formation. Nevertheless, the market has recently failed by falling trend-line resistance off of the 2009 highs and we look for a lower top to carve out below 1.6620 ahead of a fresh drop over the coming sessions back below 1.6185. A break below 1.6185 will be required to accelerate declines and increase the probability for a retest of 1.5800 and deeper drop towards the 1.5000 area over the medium-term. Only back above 1.6560 gives reason for concern. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/CHF - It is too difficult to recommend any formal positions at current levels but we are still hanging on to the idea of the formation of a major inverse head & shoulders pattern, to be confirmed on a break back above 1.1000. A fresh higher low is now sought out above 1.0650 in anticipation of the move back through neckline resistance at 1.1000 over the coming days. Ultimately, only back below 1.0650 would give reason for concern. Strategy: SIDELINED FOR NOW; LOOK TO BUY.
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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