EUR
Comment: Holding rather unconvincingly in a ‘triangle’; let’s see for how much longer it can do so, remembering to beware of false breaks and extensions.
Strategy: Attempt longs at 1.2555/1.2500; stop below 1.2300. First target 1.2700, then 1.2800.
EUR/JPY
Comment: Moving into the apex of ‘triangle’ consolidation. Later this month we continue to expect a drop to October’s low at 113.62 and then some more.
Strategy: Attempt shorts at 122.00, adding to 124.00; stop above 128.50. First target 120.20 then 118.50.
GBP
Comment: Carnage and now the authorities talk about a potential run on the pound. Cable is clinging by its fingernails above Thursday’s low at 1.4560 within the downward-sloping ‘wedge’ formation. Extreme caution is warranted as one-month at-the-money implied volatility is at 26.75%, just shy of last week’s record high at 27.75%.
Strategy: Possibly attempt tiny longs at 1.4725; stop below 1.4500. First target 1.5000 then 1.5200.
JPY
Comment: In a large holding pattern, a ‘triangle’, and likely to hold inside here today and possibly tomorrow. Later this week we favour a break lower here and in all versions of the ‘carry trade’. Volatility should remain high and may even increase towards month-end.
Strategy: Sell at 97.00, adding to 97.50; stop above 98.55. First target 96.00, then 94.50 again.
