• Euro sell issued @1.4670
• Dollar/Yen hovers above 91.75
• Cable gains limited from here
• Dollar/Swiss dips to be bought
EUR/USD – There is no significant topside resistance now until 1.4720 and scope does exist for a move back towards this level over the coming hours. As per the usual however we continue to look for opportunities to sell into rallies, with the hope of catching a sizeable corrective pullback. Any moves towards 1.4700 should present an ideal short-term sell entry on Thursday. We will also pay close attention to the daily RSI which is approaching overbought readings by 70. A push to 70 will intensify our bearish outlook. STRATEGY: SELL @1.4670 FOR AN OPEN OBJECTIVE; STOP @1.4870. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY CLOSE (5PM NY) ON THURSDAY.
USD/JPY – No change from Wednesday…Tuesday’s sharp setbacks once again put the focus on the downside with the market still eyeing a break of the July trend lows at 91.75. While the overall structure is grossly bearish, we are not inclined to sell the pair at current levels which are already close to oversold and therefore not offering a compelling risk/reward trade. Instead, we will wait for a break below 91.75 to potentially catch a playable long trade in anticipation of a correction, or wait for another rally from current levels to look to sell back into the strong downtrend. Key resistance above comes in by 93.30 with a break of this level now required to take the pressure off of the downside. STRATEGY: STAND ASIDE FOR NOW; AWAIT CLEARER SIGNAL. .
GBP/USD – Bulls have no reason to get too excited at current levels with the market still very well confined to a multi week range below the 2009 highs. We continue to hold onto a more bearish bias with any rallies viewed as a good sell opportunity in anticipation of a major topping formation on the daily chart that ultimately could project declines back towards the 1.5000 area over the coming weeks. Nevertheless, we will proceed with caution and only look to establish short positions on overbought intraday readings. An ideal level to look to sell on Thursday comes in by 1.6685 which directly coincides with the 61.8% fib retracement off of the 1.7045-1.6115 move. However, we will not issue a formal recommendation at this time and will stand aside. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/CHF – Tuesday’s break below critical psychological barriers at 1.0500 definitely delays are constructive outlook and potentially exposes next key support from December 2008 at 1.0370. We still do not recommend selling at current levels and instead will look for a dip and overshoot beyond 1.0370 to look to establish a counter-trend long trade. A drop into the lower 1.0300’s should put the daily RSI below 30 and set-up a compelling long trade. We will keep a close eye. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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