• Euro consolidates ahead of next drop; sell rallies
• Dollar/Yen fails to extend gains for now; looking to buy dips
• Cable rallies sharply from lows; still classed as corrective
• Dollar/Swiss higher low sought ahead of fresh upside
EUR/USD - The market has clearly broken down from a bull channel that had defined trade for the past several days, to confirm a shift in the overall structure. Deeper setbacks are now seen ahead, with any rallies expected to be limited to the previous trend-line support which comes in by 1.4050. Our 1.4210 short from last week met its objective at 1.3900 on Monday, and we will look to re-sell into rallies. Position: SHORT FROM 1.4210 MET OBJECTIVE @1.3900, STAND ASIDE.
USD/JPY - What a difference a day makes. We had established a short trade on Friday with the market so heavily overbought intraday and testing some shorter-term trend-line resistance off of the 101.45 2009 highs. However, gains continued to extend into the afternoon, resulting in a parabolic rally that had closed above the trend-line. This was not the outcome we were looking for and as a result, we exited the trade this morning on the pullback into the low 98.00's for a small loss. We view the close above the trend-line on Friday as significant, with the move likely signaling additional upside over the coming weeks, back towards next key longer-term falling trend-line resistance just over 100.00. As such, we will now look for an opportunity to reverse and get long on a dip below 98.00 on Monday. We will use the 50-Day SMA as a point of entry. Strategy: BUY @97.60 FOR A 100.00 OBJECTIVE, STOP @96.40. Recommendation to be removed if not triggered by NY close (5pm ET) on Monday.
GBP/USD - The latest round of pullbacks off of the 2009 highs by 1.6665 from the previous week have stalled out by 1.5800 thus far ahead of the latest minor bounce. The result is a bullish dragonfly doji/hammer formation with the market trading back to and slightly above daily opening levels. However, any upside is seen limited, with the market only stalling out, in our opinion, for a minor corrective bounce. There is good former support in the 1.5800 area and the current bounce is to be expected for now. Look for additional rallies to be well capped by 1.6245 ahead of the next drop below 1.5800 towards 1.5500. Only back above 1.6245 delays. Position: SHORT FROM 1.6407 BOOKED PROFIT AT 1.5870, STAND ASIDE.
USD/CHF - Setbacks have been very well supported by 1.0590 and the market has reversed course to suggest that a base could now be in place. Daily studies show plenty of room to run with Monday's break back above 1.0955 to accelerate and open a fresh upside extension potentially back towards 1.1270 over the coming days. Look for setbacks to now be well supported in the 1.0800 area. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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.
Joel Kruger publishes 6 daily pieces:
Tech Talk - A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
Morning Slices - Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes Trade of the Day).
Monday-Friday (between 6:30am-7:30am EST)
Indicator of the Day - A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
Cross Country - A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
Scandi Daily - A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
Daily Classical - A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)