• Euro ready for pullback
• Dollar/Yen double bottom
• Cable to test major neckline
• Dollar/Swiss back to 1.0500
EUR/USD – The strong rally appears to have finally stalled out by 1.4770 and Friday’s bearish reversal day has been showing some good downside follow through thus far on Monday. Daily studies show plenty of room for additional corrective weakness and we look for a break below the 10-Day SMA at 1.4430 to accelerate declines back to retest the 20-Day SMA in the 1.4460 area. Any intraday rallies should be well capped ahead of 1.4700. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/JPY – Gains have accelerated in the early week following the break above double bottom neckline resistance at 91.65. The break above the neckline now officially confirms short-term bottoming and projects fresh upside over the coming days back towards a measured move objective at 93.20. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS
GBP/USD – We continue to maintain a sell on rallies approach to this market with the view that the pair has made a meaningful high above 1.7000 this year. The market looks to be in the process of carving the right shoulder of a head & shoulders top that ultimately would project setbacks to 1.5000 over the coming weeks. We are now nearing and expected to test key neckline support which comes in just under psychological barriers at 1.6000. Any intraday rallies should be well capped in the 1.6300’s. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/CHF – At a minimum, a short-term base appears to be in place by the recent 2009 lows at 1.0275 and we look for a break above 1.0350 to confirm basing prospects and open fresh upside over the coming hours and days back towards the 1.0500, previous support now turned resistance area. Our core view at current levels is also quite bullish with any medium-term setbacks now seen limited to the 78.6% fib retrace off of the major 2008 low-highs at 1.0200. As such we recommend looking to build longs at current levels. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS
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 jskruger@fxcm.com and you will be added to the "distribution" list.
Visit the DailyFX Forex Stream for Real-Time News and Market Updates
