EUR
Comment: A small short squeeze, as expected, failing just ahead of our 1.3000 target. Expect cautious consolidation today and possibly another upside probe tomorrow.
Strategy: Attempt longs on a drop to 1.2700, adding to 1.2600; stop below 1.2400. Cover longs between 1.2950 and 1.3000 and stand aside if possible.
EUR/JPY
Comment: Breaking above immediate trendline resistance which may bring crumbs of comfort for some. Note that we are well within the recent range and Fibonacci retracement levels. This is the second squeeze higher we have been warning we would have to allow for, and is seen as a selling opportunity for selling ahead of another drop in December.
Strategy: Attempt shorts at 124.00; stop well above 127.30. First target 122.00 then 118.00.
GBP
Comment: A half-heated break above the top of the downward-sloping ‘wedge’ formation though well within recent ranges. This is really very unimpressive and probably meaningless. Continue trading the range remembering that a short squeeze is still possible.
Strategy: Attempt longs on a drop to 1.5000; stop below 1.4700. First target 1.5200.
JPY
Comment: The bounce of the last two days may feel big but we remain well within the large ‘triangle’ holding pattern that has dominated since late October. This obviously cannot last much longer, and we shall continue to allow for a brief break above the top of the formation, but then we expect another round of unwinding of the carry trade before year-end. This could gather considerable momentum in thin markets this week and in December.
Strategy: Sell at 96.35, adding to 97.00; stop well above 98.35. First target 95.00, then 94.00.
