EUR
Comment: Yesterday’s small ‘spike low/hanging man’ candle hints at a market looking for direction (here and in several major currencies too). As we move towards the pivotal 1.4200 area we feel that implied volatility should leap higher on a sustained break above 15.00%.
Strategy: Buy at 1.3950, adding to 1.3800; stop well below 1.3700. Short term target 1.4000, then a lot more with a first measured target at 1.4200 then 1.4550.
EUR/JPY
Comment: Consolidating above a very large Ichimoku ‘cloud’ in what we now see as a large ‘triangle’. We now favour a slow sideways move over the next week or two, here and in a whole range of other Yen crosses.
Strategy: Possibly attempt small shorts at 133.00; stop above 133.75. Add to shorts on a sustained break below 130.90 for 129.50 short term.
GBP
Comment: Sneaking to a new high for the year at 1.5982 after two consecutive ‘spike low/doji’ candles. Cable is overbought but bullish momentum is stronger than it has been since December 2006.
Strategy: Buy at 1.5950, adding to 1.5800; stop well below 1.5700. Add to longs on a sustained break above 1.6000 for 1.6100/1.6200 short term.
JPY
Comment: Hovering above fairly pivotal support roughly between 94.00 and 94.50, but below a large Ichimoku ‘cloud’ with moving averages suggesting a short. Implied volatility is expected to pick up over the next two weeks as prices look for direction. We continue to favour a move lower, maybe not this week but probably early in June.
Strategy: Sell at 95.45, adding to 96.00; stop above 97.00. First target 94.55, then 93.55.
