EUR
Comment: Extraordinary price action, so much so that one might almost suspect the ‘hand of God’. Surely we cannot hold inside this rather nasty ‘triangle’ for how much longer, and remember this currency pair may be subject to ‘false breaks’. Therefore implied volatility should remain high.
Strategy: Attempt small longs at 1.2670, adding to 1.2570; stop below 1.2400. Add to longs on a sustained break above 1.2700 for 1.2800 and maybe 1.2900.
EUR/JPY
Comment: Looking just like USD/JPY but with different prices along the right hand side. We feel there is more downside to come over the next five or ten days.
Strategy: Attempt shorts at 120.75; stop well above 122.00. First target 118.00 then today’s low at 116.45 and 115.50 where consolidation is likely.
GBP
Comment: Nudging at the topside of the downward-sloping ‘wedge’ formation, and a similar pattern can be seen in the Dollar Index future. Extreme caution is warranted as one-month at-the-money implied volatility is still very high and the chance of a ‘false break’ or some other surprising move is high.
Strategy: Attempt longs at 1.4940; stop well below 1.4700. First target 1.5050 then 1.5200.
JPY
Comment: Holding rather messily roughly in the middle of the large ‘triangle’ holding pattern that has dominated since late October. This obviously cannot last much longer and we expect another round of unwinding of the carry trade before year-end. This could gather considerable momentum in thin markets this week.
Strategy: Sell at 95.35, adding to 96.00; stop well above 96.25. First target 94.50, then 93.00, maybe 92.50/92.00.
