•Euro looking to carve out fresh lower top ahead of next drop
•Dollar/Yen confined to inside day price action
•Cable mirrors Wednesday price action following whipsaw trade
•Dollar/Swiss well supported on dips; look to buy
EUR/USD - Not yet ready to break down after triggering a major head & shoulders top on Monday. The market has since been gradually pushing higher and looks set for a test of falling trend-line resistance off of the 2009 highs which currently comes in by 1.4050. From there, we see a lower top taking form ahead of the next downside extension through 1.3750. Only back above 1.4175 however, gives reason for concern. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/JPY - Although price action on Thursday is still confined to an inside day, the moves have been quite constructive and the market could be attempting to carve out a fresh higher low above 94.45 ahead of the next upside extension beyond 98.90 and eventually through psychological barriers by 100.00. However it is too early to tell at this juncture, and we will remain sidelined until a clearer opportunity presents itself. Strategy: STAND ASIDE; AWAIT CLEARER SIGNAL.
GBP/USD - As per our commentary in the previous days, rallies have been well capped by 1.6500 and a fresh lower top is sought out by Tuesday's 1.6510 high ahead of the next drop back below 1.6185, and towards key double top neckline support at 1.5800. As expected, Tuesday's bullish outside day has failed to show any positive follow through, and we continue to favor additional weakness from current levels. Ultimately, only back above 1.6665 negates. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/CHF - Setbacks have stalled out by 1.0650 in the previous week, which also coincides with previous resistance now turned support, and a fresh higher low is now sought out, to be confirmed on a break back above 1.0990 over the coming sessions. The result has been the formation of a potential inverse head & shoulders pattern that ultimately projects upside back towards the 1.1400 area over the coming weeks. Look for a break above 1.1000 to confirm and accelerate gains. Only back under 1.0650 delays. Thursday's inside day (technically not inside day but only marginally breached Wednesday's low) price action suggests the market is consolidating ahead of fresh upside. 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 email@example.com and you will be added to the distribution list.
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