• Euro still locked in consolidation; confined to inside day
• Dollar/Yen RSI approaching oversold; but still room for drop to 90.00
• Cable supported by 50-Day SMA for now; anticipate break
• Dollar/Swiss still attempting to carve out meaningful base
• Dollar/Cad pauses ahead of next major move
• Australian Dollar vulnerable following negative SMA cross
• New Zealand Dollar contemplates declines below 50-Day SMA
• Sterling/Yen breaks rising channel support but unable to close below 100-Day SMA
EUR/USD - The market remains locked in a multi-day consolidation since positing fresh 2009 highs by 1.4340 back in early June. While our shorter term outlook has favored the bearish side (we are short from 1.4180), the medium-term outlook is more uncertain from here and it remains to be seen whether we are looking to put in a medium-term lower top by 1.4340, or a medium-term higher low by 1.3750. A break back below 1.3750 would signal a resumption of the broader bearish structure and expose a fresh drop to the 1.3000 area, while a sustained break above 1.4340 would bring 1.4720-1.4870 back into focus. 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 - Continues to extend declines following the break below key medium-term range support by 93.55-85. Setbacks have traded into the 91.00's thus far and while there is no sign of a bottom just yet, the risks from here for additional declines look less promising, with the daily RSI now trading by the critical 30 level. Nevertheless, we see no real support until the 90.00 area, which also coincides with the 78.6% fib retrace off of the 2009 low-highs. Look for rallies to be well capped by the previous support now turned resistance at 93.55-85 ahead of a fresh downside extension to psychological barriers at 90.00. We will look to buy on an approach to 90.00 this week. STRATEGY: STAND ASIDE; LOOK TO BUY
GBP/USD - Gains have stalled out by the 61.8% fib retracement off of the 1.8670-1.3500 September 2008-January 2009 move and the market looks like it could be in the process of rolling back over in favor of a potential bearish resumption. Look for a break and close below the 50-Day SMA (1.6030) and 1.5985 to reaffirm bearish bias and expose key medium-term support by 1.5800. Below 1.5800 officially confirms bearish resumption and opens more significant drop towards 1.5000 over the coming weeks. Back above 1.6380 is required to delay bearish bias. 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. Back under 1.0750 will however delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
USD/CAD - Nothing too exciting here with the market content on trading within a consolidation ahead of the next major move. The recent positive cross of the 20-Day SMA through the 50-Day SMA helps to strengthen our bullish bias, but a break back above 1.1725 will now be required to open the door to fresh upside back towards the 1.2000 area. Any setbacks should now be well supported ahead of 1.1400 and we will look for opportunities to buy into dips. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
AUD/USD - The 50-Day SMA which had been supporting much of the rally in 2009 has been convincingly broken to the downside with last Wednesday's sharp pullback also taking out multi-day range support at 0.7780. This opens the door for deeper setbacks over the coming days with a fresh drop now eyed towards next key support by 0.7500. The 10-Day SMA has crossed below the 20-Day and looks to be on the verge of a negative cross with the 50-Day SMA. This strengthens bearish outlook and could be warning of a medium-term lower top in place at 0.8265. Any rallies should now be well capped ahead of 0.8000. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
NZD/USD - The break of 0.6240 in the previous week should now set the stage for a bearish resumption back towards 0.6000 over the coming days. However, the market has since been consolidating and will need to close below the 50-Day SMA and also take out 0.6155 to accelerate declines. Still, we retain a bearish bias and look for any rallies to be well capped by the 20-Day SMA at 0.6355. Back above 0.6400 gives reason for concern. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
GBP/JPY - The market has been in the process of a bearish consolidation following the latest sharp setbacks below the multi-day rising trend-line support off of the 2009 multi-year lows. However, despite the break of the bull channel, the drop is finding some solid support by the 100-Day SMA (148.15) for now, with the cross unable to close below thus far. Look for a close below the 100-Day to officially confirm shift in structure and open a more material depreciation towards 140.00, while inability to close below the 100-Day will keep the pressure on the topside. Back above 152.40 required to accelerate gains. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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