• Euro extends gains after easily taking out 1.3740 trend highs
• Dollar/Yen testing 100-Day SMA and bottom of Ichimoku
• Cable rips through 200-Day SMA and breaks above 70 on the daily RSI
• Dollar/Swiss eyes next drop to 1.0865
EUR/USD - Has finally taken out the key 1.3740 trend highs to trade just shy of 1.3800 thus far. From here, while there is scope for additional upside, we see the more medium-term risks for the formation of a top in the 1.4000 area ahead of a major USD bull run. Next key resistance comes in by 1.3850 which represents the 61.8% fib retrace off of the 1.4720-1.2455 move. We will look to sell a failure ahead of this level. Strategy: SIDELINED; AWAIT CLEARER SIGNAL
USD/JPY - One again testing the bottom of the Ichimoku cloud and 100-Day SMA. The market has drifted slightly below both indicators and threatens to force a bearish shift in the structure. However, we would recommend standing aside for now with the potential from here also for an upside reversal should the 100-Day and Ichimoku support on a close basis. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
GBP/USD - After breaking the up and down consolidation of the past several days the market has been in sharp rally mode taking out the 200-Day SMA for the first time since late July 2008. However, any additional gains are seen limited with daily studies now highly overextended after the RSI just crossed above 70.0. Fresh shorts are in play in anticipation of a significant corrective pullback. Position: SHORT @1.5655 FOR A 1.5265 OBJECTIVE, STOP @1.5855. Stops to be trailed to cost on a break back below 1.5605. If 1.5605 not broken, position to be closed out at NY close (5pm NY time) on Wednesday.
USD/CHF - Has broken to fresh multi-day lows on Wednesday below the recent 1.0975 lows to expose deeper setbacks to 1.0865 over the coming days. Daily studies still show room to run and only a break back above 1.1130 will delay and potentially shift focus back on topside. 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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