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Daily Technical Analysis

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JPY: Possibly attempt the tiniest longs at 95.35

Fri, Oct 24 2008, 07:07 GMT
by Nicole Elliott

Mizuho Corporate Bank

EUR

Comment: Clinging to a low at 1.2726, its lowest since mid-November 2006, as one-month at-the-money implied volatility is hideously expensive at 21.60%, just below last week’s record 22.75%. Bearish momentum has eased a little and the Euro remains grossly oversold. Be very careful as moves like this are not sustainable. The collapse from July’s record high takes the shape of an A, B, C-type correction where C equals A.

Strategy: Do nothing if you can. For those who have to: attempt small longs at 1.2745; stop well below 1.2700. First target 1.2900, then 1.3000.

EUR/JPY

Comment: Unstoppable. The Euro has dropped to its lowest level since November 2002 as the massive move of the last two and a half months unravels further. It is more oversold than it has ever been and bearish momentum versus JPY is also at record levels. Maybe it’s time to take a little breather. Be very careful ahead of the weekend.

Strategy: The bravest and the desperate might try to sell at 122.00; stop/reverse above 124.25 for 129.00. Cover shorts between 120.00 and 115.00.

GBP

Comment: Another day, another new recent low at 1.5936 and its lowest since September 2003. Meanwhile Boris Johnson, mayor of London, says: ‘Bienvenue à Londres. This is the place to come. It’s got the lot, it’s already the world’s number 1 tourist destination and now it’s the cheapest its has been in five years’.

Strategy: Do nothing.

JPY

Comment: Dropping below March’s low to 95.13, in turn its lowest since August 1995. Meanwhile Yen crosses have dropped to new lows for this month, and some stock indices have done so too, as the ‘carry trade’ unravels and investors and businesses realise there is no money (especially for those who need it most). Listen for rumour of potential intervention around 95.00. There are very few chart points below here as it only traded below 95.00 between March 1995 and September 1995 and the all-time low was 79.70.

Strategy: Possibly attempt the tiniest longs at 95.35; stop/reverse below 94.75 for 90.00. Cover longs ahead of 98.00 and stand aside if possible. Further out we would look to re-sell roughly between 100.00 and 102.00.

• Download Full EUR Technical Analysis
• Download Full EUR/JPY Technical Analysis
• Download Full GBP Technical Analysis
• Download Full JPY Technical Analysis

Published on  Fri, Oct 24 2008, 07:14 GMT