• Euro trades into solid resistance zone; lower top sought
• Dollar/Yen extends gains and eyes retest of psychological barriers
• Cable could be looking to carve right shoulder
• Dollar/Swiss price action remains choppy and directionless
• Dollar/Cad expected to be well supported by 1.1200 area; long
• Australian Dollar looking to test falling trend-line resistance
• New Zealand Dollar rallies to range highs; look to sell
• Sterling/Yen sell recommendation issued by former channel support
EUR/USD - While the break above the recent trend highs at 1.4075 on Wednesday is somewhat discouraging, we still retain our bearish bias and look for a lower top to carve out below 1.4200 ahead of the next major drop. Daily studies show room for gains towards the mid-1.4100's, before a solid technical confluence of resistance in the form of falling trend-line off of the 2009 highs, the 78.6% fib retrace off of the 1.4200-1.3830 move, and upper Bollinger all step in to cap additional gains. Only back above 1.4200 would give reason for pause. POSITION: SHORT @1.4180 FOR AN OPEN OBJECTIVE; BOOKED PROFITS ON 3/5 OF POSITION AND STOPS AT 1.4180 ON REMAINING 2/5
USD/JPY - The market is currently in the process of carving out a short-term bottom by 91.75. However, any gains beyond 95.00 are seen limited with the overall structure still grossly bearish. A lower top is now sought out in the 95.00 area over the coming days ahead of a fresh drop back through 91.75 and towards psychological barriers at 90.00 which guard against the critical 87.15 trend lows. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD - Any rallies are still classed as corrective and we contend that the market continues to attempt to carve out a meaningful medium-term top by 1.6745. Look for additional gains to be well capped into the 1.6500's ahead of a resumption of setbacks towards 1.5800 over the coming days. While the formation would be somewhat questionable, an argument could be made for a very ugly head & shoulders topping formation with the market now forming the right shoulder. Ultimately, only back above 1.6745 would negate and give reason for shift in outlook. STRATEGY: SIDELINED FOR NOW; 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 break of this level will help to confirm our bullish outlook. A close back under 1.0700-50 will however delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
USD/CAD - Yesterday we took a shot buying an oversold Eur/Cad hourly chart and exited the trade this morning at break-even after the market failed to produce the desired result. This morning we once again established a bearish CAD trade but this time through the USD. Daily studies show some solid support at current levels by 1.1200 and this in conjunction with a severely oversold hourly RSI below 15, attracted us to the current long position. The breakout back in June off of the yearly lows by 1.0785 had accelerated in the 1.1200 area and we look for this zone to now support the current round of setbacks ahead of a resumption of the broader up-move. Look for a medium-term higher low to now carve out at current levels and above 1.0785 ahead of an eventual retest and break back above 1.1725 over the coming weeks. POSITION: LONG @1.1205 FOR AN OPEN OBJECTIVE; STOP 1.1055
AUD/USD - Despite the current rally, we retain a bearish bias in the pair with a lower top now sought out by falling trend-line resistance off of the 2009 highs which currently resides in the 0.8100 area. The key level to watch above comes in by 0.8160, with only a break of this level to giver reason for concern. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
NZD/USD - Wednesday's gains have been most impressive with the market racing back towards the familiar range and 2009 highs by 0.6600. However, we continue to look for opportunities to sell the pair and would be inclined to consider fresh shorts on an intraday topside failure above 0.6500. Next key resistance comes in by 0.6550, which guards against the 0.6600 2009 highs from early June. Support now comes in by 0.6385. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
GBP/JPY - With a current daily low of 152.40, the daily ATR (Average True Range) projects a potential daily high today back towards the 20-Day SMA at 155.40. We are not inclined to enter any positions at current levels but will be more than happy to establish a short position should the market rally to test the 20-Day SMA on Wednesday. Major bull channel support off of the 2009 multi-year lows was broken in the previous week and any rallies are now seen limited to the former channel support now turned resistance which also coincides with the 20-Day SMA and a 61.8% fib retrace off of the latest move, ahead of an eventual resumption of declines back below the 100-Day SMA which has managed to successfully prop setbacks for now. Weekly studies are also quite bearish and we look for a lower top to carve out below 157.15, ideally by the 20-Day SMA and former channel support ahead of the next major drop. STRATEGY: SELL @155.30 FOR AN OPEN OBJECTIVE, STOP @157.30. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON WEDNESDAY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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