EUR
Comment: Keeping its head down as sterling and the Yen find themselves in the eye of the storm. Slipping through a very thin Ichimoku ‘cloud’ having given up 78.6% of December’s rally and it is somewhat oversold. Expect it to try and hold above 1.2900 today.
Strategy: Attempt longs at 1.3015; stop below 1.2800. Target 1.3200.
EUR/JPY
Comment: A big ‘hammer’ below the recent chart formation hitting a low at 112.08, well below October’s low at 113.62. This is the ‘spike low’ we had warned of and can also be seen in many other Yen crosses. Now we shall be watching for something similar on weekly and monthly candles. Expect it to try and hold above 15.50 today.
Strategy: Attempt longs at 116.00; stop below 114.40. Target 117.00, then 119.00.
GBP
Comment: Everyone’s favourite ‘dog’, fingers wagging to the toxic banks spreading their poison to sovereign debt. Falling below the downward-sloping ‘wedge’ formation to a low at 1.3620, Cable’s lowest since September 1985 which was a period of massive FX turmoil. We have formed the ‘spike low’ we were waiting for and now will wait for a break above 1.4050 for the first short squeeze.
Strategy: Attempt longs at 1.3840; stop below 1.3600. First target 1.4000, then 1.4400.
JPY
Comment: Massive moves yesterday afternoon as allegedly an option kicks in, understandably rattling markets and the finance minister who is now watching FX moves carefully. Understandable too as the Yen trades at some of its strongest levels ever against a nearly all currencies and as the growth prospects for Q1 2009 look increasingly dire. Culminating in a massive ‘hammer’ from a low at 87.10, against October’s 87.12 low, looks like a huge ‘spike low’ below the ‘triangle’ formation and possibly starting a ‘double bottom’. Expect nervous consolidation above 88.40 today, possibly with a squeeze back up to 90.00 late today/tomorrow.
Strategy: Trade the range between 88.50 and 90.00, maybe 91.00, keeping an open mind.
