Not much change was evident since yesterday's trading as majors remained within relatively the same levels despite the mixed data seen yesterday from the US that showed improvement in the initial claims yet poor TIC flows.
The 16 nation currency remains trapped within the 61.8% and 76.4% corrections at 1.3850 and 1.4180 respectively for the decline from 1.4715 and was bottomed out at 1.2460 where we see the pair is currently affected by the bearish crossover on the RVI and stochastic indicators on the four hour charts. We believe the pair may decline further to 1.4050 before rebounding back to the upside where there are signs of a possible head and shoulders top pattern forming on the four hour charts with a possible neckline at 1.4050. Note that momentum indicators on the daily charts are near overbought areas yet are still trending to the upside which may support our overview to the upside after the intraday correction.
The cable failed to close above the 38.2% correction at 1.6430 yesterday despite recording a high of 1.6477 to hit the key resistance for the contracting triangle. We see trading is currently at the 1.6380 levels with technical indicators supporting the downside direction. Note that a possible double top with a neckline at 1.6350 is forming on the four hour charts where a breach of the neckline will take the pair towards its technical targets at 1.6230 - 1.6240. Our outlook remains valid unless trading rebounds to the upside to maintain levels above the 1.6480 level.
Finally, the USD/JPY pair couldn't hold on to higher levels after reversing back to the downside yesterday to close below the 94 mark. We see a dark cloud pattern on the daily charts suggesting further downside movements supported by the possible bearish crossover on the stochastic indicator which may take the pair to 93.15 and perhaps extend to the 23.6% correction at 92.60. Moving down a time frame to the four hour charts, we see thin trading since the morning session yet our overview remains protected by the bearish crossover of the 7 and 15 MA. The downside movements continue as far as 94.30 remains intact.