•Euro continues to stall out after breaking key neckline support
•Dollar/Yen approaches key psychological barriers by 95.00
•Cable confined to inside trading day; deeper setbacks ahead
•Dollar/Swiss yet to break neckline of inverse h&s base
EUR/USD - The much talked about head & shoulders top developing over the past few weeks has finally triggered on Monday and now projects additional declines towards 1.3250 over the coming weeks. Look for any rallies to now be very well capped by 1.4000, ahead of a drop back to challenge next support in the 1.3585-1.3730 area. Inside day price action on Wednesday is merely suggestive of additional consolidation ahead of the next drop. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/JPY - Has managed to extend declines into Wednesday, with the market breaking below some shorter-term rising trend-line support and pushing towards psychological barriers by 95.00. The overall structure is looking quite heavy and deeper setbacks are seen towards 95.00. However, there is some decent internal support by the figure and with intraday studies stretched, we have opted to look to buy on a test of 95.00 on Wednesday. Strategy: BUY @95.00 FOR AN OPEN OBJECTIVE, STOP @93.75. *Recommendation to be removed if not triggered by NY close (5pm ET) on Wednesday.
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 1.6210, 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, with some inside day price action on Wednesday, 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. Wednesday's inside day 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 firstname.lastname@example.org and you will be added to the distribution list.
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