EUR
Comment: Marginally more interesting as we bounce from the 78.6% retracement level. Short covering is likely on a sustained break above 1.3260/1.3300 and should allow to Euro to push up to the bottom of the Ichimoku ‘cloud’ at 1.3525.
Strategy: Buy at 1.3190 but only if prepared to add to 1.3000; stop below 1.2850. Add to longs above 1.3260 and again above 1.3300 for 1.3525 short term.
EUR/JPY
Comment: Many analysts are seeing the bounce from January’s low at 112.08 as corrective and are looking to sell against trendline resistance. We beg to differ and see the drop below 13.60 as an ‘extension’ and that this cross should continue to hold within the broad range established since October. Therefore dips to 115.00 are seen as buying opportunities for a squeeze into the middle of the range around 122.50.
Strategy: Buy at 118.00 but only if prepared to add to 115.00; stop below 113.50. Target 120.00, then 122.00.
GBP
Comment: Hauling itself up from a low at 1.3500 after those who should know better have written off UK plc as a basket case. While still below the downward-sloping ‘wedge’ formation bears will take comfort. We disagree and see the drop below the bottom of the chart formation as an ‘extension’ which will be reversed imminently.
Strategy: Buy at 1.4070, adding to 1.3800; stop below 1.3500. Add to longs on a sustained break above 1.4250 for 1.4600 short term.
JPY
Comment: Moving at a snail’s pace, with a potential ‘double bottom’ at 87.10, and we still feel prices ought to move up to 91.000. The pace should pick up a little on a sustained break above 90.00. Note that open interest is about one third of 2007’s peak, futures volume about half.
Strategy: Buy at 89.40 but only if prepared to add to 88.50; stop below 87.80. Add to longs on a sustained break above 90.25 for 91.00.
