EUR
Comment: Still consolidating in a small rather nasty ‘triangle’ as the lower edge of the daily Ichimoku ‘cloud’ limits the downside for the moment. One-month implied volatility is understandably running at half of last year’s peak. Little to get excited about today.
Strategy: Possibly attempt tiny longs at 1.3985/1.3950; stop well below 1.3800. Short term target 1.4050.
EUR/JPY
Comment: Consolidating above 126.00 which is the middle of this year’s broad trading band with fairly big intra-day moves, the way prices bounce from the 128.00 area looking slightly suspect. Implied volatility should move a lot higher.
Strategy: Attempt small shorts at 130.40; stop well above 132.00. Short term target 128.50/128.00.
GBP
Comment: Yesterday’s ‘hammer’ candle ahead of the top of the Ichimoku ‘cloud’ and the bottom of the ‘triangle’ is interesting and might add a little bullish momentum – much-needed as this has been dropping very steadily for the last month. Be careful and expect volatility to increase significantly from the levels seen in the last three months.
Strategy: Possibly attempt tiny longs at 1.6250, adding to 1.6100; stop below 1.5980. First target 1.6300, then 1.6500.
JPY
Comment: Almost too good to be true as for a third time the US dollar bounces strongly from the 91.80/91.73 area to form a ‘spike low’. This has eased the oversold situation but momentum is still decidedly bearish. One-month at-the-money implied volatility looks set to increase significantly over the next three to six weeks, with a break above 16.00% setting the ball rolling.
Strategy: Attempt small shorts at 93.20; stop well above 93.60. Cover ahead of 91.70 but be ready to re-sell below 91.50 for 90.00, then lower still.
