• Euro rejected above 1.4300; sets up hourly double top
• Dollar/Yen well capped by internal trend resistance
• Cable still attempting to carve right shoulder
• Dollar/Swiss breaks higher to keep basing prospects intact
EUR/USD - The failure above 1.4300 and subsequent sharp pullback on Tuesday now opens the door to a potential hourly double top scenario with a break below the neckline at 1.4120 to confirm and open a measured move drop back into the lower 1.3900's. Although it is extremely premature, any pullback over the coming days towards 1.3900 will also set up a potential medium-term double top on the daily chart to be confirmed on a break below 1.3750 further down. However, inability to break below 1.4120 will negate and suggest that the market is only consolidating ahead of the next upside push beyond 1.4340. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
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 medium-term 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. In the interim, back above 1.0775 today takes pressure off of the downside. Below 1.0590 negates. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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