EUR
Comment: Our patience appears to be paying off and the Euro is testing the top of the ‘flag’ formation that has held for weeks. The highest price in this formation is 1.2980, June 2006, and above here there are likely to be stops. As with other currencies, the Euro is overbought against the US dollar but seeing as we have wasted so much time this year, and coupled with holiday-thin markets, we expect another explosive move higher to the 1.3100 area.
Strategy: Buy at 1.2935, adding to 1.2880; stop below 1.2850. Short term target 1.3000, above which a flurry of buy stops are likely to be triggered.
EUR/JPY
Comment: More signs of instability as we consolidate below the record high at 151.68. We expect another pullback today with a break below yesterday’s low at 150.66 targeting 150.50 and maybe 150.00.
Strategy: Attempt tiny shorts on a bounce to 151.00; stop above 151.20. Target 150.50 and maybe 150.00.
GBP
Comment: The strongest daily close in months; let’s hope this will be replicated on the weekly chart. Note that Cable is still not overbought and that momentum is just bullish. A sustained break above 1.9180 targets 1.9220 short term and then 1.9300.
Strategy: Buy at 1.9135/1.9100; tight stop below 1.9050 to re-buy at 1.9000; stop below 1.8950. Short term target 1.9175, then 1.9300 and then the December 2004 high at 1.9550.
JPY
Comment: Dropping decisively below the Ichimoku ‘cloud’ and trendline support. The US dollar is slightly oversold but because we have wasted so much time over the last three weeks we feel bearish pressure should increase and we continue to allow for a drop to 114.0 by the end of this month. For today we favour a drop to 116.00, the 200-day moving average, and maybe 115.75, the 38% Fibonacci retracement from May’s low at 109.00 to October’s high at 119.20.
Strategy: Sell at 116.55, adding to 117.00; stop well above 117.20. Targets as above.
