EUR
Comment: Breaking above trendline resistance and now the 26-day average too, making things a little more interesting. Still too early to make decisive calls as we remain within the range established late October. A weekly close above 1.3200 should set off the first round of short-covering, which may gain massive momentum in thin December conditions.
Strategy: Attempt longs at 1.2975, adding to 1.2800; stop below 1.2650. Cover longs between 1.3050 and 1.3100 and stand aside watching for a strong weekly close.
EUR/JPY
Comment: Re-drawing the edges of the ‘triangle’ we can see that we are really stuck in consolidation mode and there is little to get excited about just yet. The longer we hold below the 128.00 area the sooner we shall test and break below the lower edge.
Strategy: Attempt shorts at 123.00, adding to 125.00; stop well above 127.30. First target 122.00 then 118.00. Re-sell in earnest on a break below 116.40 for 114.00.
GBP
Comment: Breaking above the top of the downward-sloping ‘wedge’ formation, as has its mirror image the Dollar Index future. We are well within normal retracement parameters but another round of short-covering is likely on a sustained break above 1.5650, targeting 1.6100.
Strategy: Attempt longs at 1.5350 but only if prepared to add to 1.5000; stop below 1.4700. First target 1.5600, then 1.6000.
JPY
Comment: Topping well within the large ‘triangle’ pattern and looks set to test the downside of the formation by the end of this week. As and when we break below here one-month at-the-money implied volatility should base at the 20.00% area and then edge up to 28.00%, maybe a lot more when we break below October’s low, probably some time in December.
Strategy: Sell at 94.90, adding to 96.00; stop well above 98.30. First target 94.00, then 93.00.
