EUR
Comment: Clinging with its fingertips to hold above this year’s low at 1.2329; let’s see for how much longer it can do so, remembering to beware of false breaks and extensions.
Strategy: Possibly attempt tiny longs at 1.2500; stop below 1.2300. First target 1.2600, then 1.2900.
EUR/JPY
Comment: Giving up and keeling over as the 26-day moving average forces it lower. Next stop October’s low at 113.62.
Strategy: Attempt shorts at 119.45, adding to 124.00; stop above 128.50. First target 118.00 then 115.50.
GBP
Comment: Sterling is collapsing and on the Bank of England’s Trade Weighted index is at its weakest since July 1996. The low so far today is 1.4829 and we might be working in a downward-sloping ‘wedge’ formation. Extreme caution is warranted as at-the-money implied volatility is back up close to record high at 27.25%.
Strategy: Possibly attempt tiny longs at 1.4885; stop below 1.4800. First target 1.5200 then 1.5600.
JPY
Comment: Giving back 61% of the late October bounce, here as well as Yen crosses (IDR/JPY especially hard hit) and equity indices. The holding pattern has been broken and the next move is a re-test of October’s lows and then a break below there. The authorities still have not understood the crux of the problem.
Strategy: Attempt shorts at 95.85 adding to 96.80; stop well above 97.15. First target 94.50 again, then 93.00 and eventually 91.00.
