EUR
Comment: Holding in the middle of a small rather nasty ‘triangle’, rallying slowly from the upper edge of the daily Ichimoku ‘cloud’. One-month implied volatility is understandably running at half of last year’s peak. Little to get excited about today though over the week we favour an upside test.
Strategy: Possibly attempt small longs at 1.4000; stop below 1.3800. Short term target 1.4050/1.4075, then 1.4140.
EUR/JPY
Comment: Rallying towards the lower edge of a large Ichimoku ‘cloud’ where we expect the move to stall and reverse. Implied volatility should move a lot higher.
Strategy: Attempt small shorts at 131.15; stop well above 132.00. Short term target 129.65, then 128.00.
GBP
Comment: Rallying slowly after the previous day’s ‘hammer’ candle ahead of the top of the Ichimoku ‘cloud’ and the bottom of the ‘triangle’. Expect a test of the top of the formation later this week.
Strategy: Attempt small longs at 1.6385, adding to 1.6200; stop below 1.6155. First target 1.6400, then 1.6500.
JPY
Comment: Bouncing strongly after testing support for a third time from the 91.80/91.73 area and several ‘spike lows’. This has eased the oversold situation very considerably though momentum is still clearly 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 93.60; stop above 94.00. Cover between 93.00 and 92.50.
