• Euro setbacks accelerate after hourly double top triggers
• Dollar/Yen pressing back to highs but expected to be well offered above 95.00
• Cable still attempting to carve right shoulder of major H&S top
• Dollar/Swiss basing structure starting to take form of potential double bottom
EUR/USD - The hourly double top scenario written about in Tuesday's commentary has played out quite nicely with the market now seen trading back into the lower 1.3900's initially. The latest topside reversal in the market also brings into focus the potential for a more significant medium-term double top to be confirmed on a break below 1.3750. Look for a close below the 50-Day SMA at 1.4035 to accelerate declines towards 1.3750. Rallies should now be well capped ahead of 1.4200 with only a break back above 1.4305 to ultimately negate bearish outlook. STRATEGY: STAND ASIDE; LOOK TO SELL
USD/JPY - Tuesday's sharp pullback confirms strength of overriding downtrend with the market stalling as anticipated ahead of the 50-Day SMA and by internal trend resistance off of the 2009 highs. A lower top is now sought out by 95.40 ahead of the next drop below 91.75 over the coming days. The recent trend lows at 91.75 guard against the critical 87.15 multi-year trend lows from late 2008/early 2009. Back above 95.40 delays. STRATEGY: STAND ASIDE; LOOK TO SELL
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. Look for any additional rallies over the coming sessions to stall out ahead of 1.6700 in anticipation of a major pullback. A break below 1.6265 will help to reaffirm bearish bias, while only back above 1.6745 negates and gives reason for pause. STRATEGY: STAND ASIDE; LOOK TO SELL
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 a break of this level will help to confirm our bullish outlook. The 1.1025 level is also the neckline of a potential double bottom. Only back under 1.0590 negates. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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