EUR
Comment: Bouncing nicely from the top of a large Ichimoku ‘cloud’ and looking increasingly like ‘triangle’ consolidation since early June. It will probably bump along cautiously sideways over the coming week too because bullish momentum is very low indeed.
Strategy: Possibly attempt small longs at 1.3920; stop well below 1.3800. Short term target 1.4050.
EUR/JPY
Comment: Precariously poised above 126.00 which is the middle of this year’s broad trading band. Prices will probably hold above yesterday’s low at 128.10 today, but this ironically would actually increase the chance of sudden gap lower over the weekend. We remind that rallies are seen as selling opportunities for another move lower later this month.
Strategy: Sell at 129.75 but only if prepared to add to 130.65; stop above 132.25. Short term target 128.15, but be ready to add to shorts on a sustained break below 128.00for a sharp drop to the 127.00/126.00 area.
GBP
Comment: Doing a lot better than we had hoped as Cable holds and bounces strongly from Fibonacci support ahead of an increasingly large, upward-sloping Ichimoku ‘cloud’. Like the Euro, price action since late May looks increasingly like ‘triangle’ consolidation as we prepare for another leg lower in the longer term trend to generalised US dollar weakness.
Strategy: Attempt longs at 1.6285/1.6200; stop below 1.6000. First target 1.6400, then 1.6600.
JPY
Comment: Holding precariously in an inverted ‘pennant’ formation and will probably hover around 93.00 again today – or at least this morning. A weekly close below 94.00 would add considerable bearish momentum for concerted downside probes of key support between 85.00 and 87.00 throughout this month. One-month at-the-money implied volatility looks set to increase significantly over the next three to six weeks.
Strategy: Attempt shorts at 93.00/93.50; stop well above 94.55. Add to shorts on a sustained break below 92.25 for 91.80 short term, then lower still.
