EUR
Comment: Rallying from Fibonacci retracement in the middle of the previous ‘triangle’ consolidation pattern. The Euro is no longer overbought and one-month at-the-money implied volatility has picked up a little. We feel that price action from last week’s high is corrective and that the long term trend to US dollar weakness will resume shortly.
Strategy: Attempt longs at 1.4260, adding to 1.4200; stop below 1.4080. Short term target 1.4300, then 1.4400.
EUR/JPY
Comment: Yesterday’s big price range and strong bounce from first Fibonacci support was not exactly what we had expected but adds weight to our view that currencies are looking for direction. We shall continue to watch for signs of topping and reversing in all Yen crosses which must confirm each other.
Strategy: Possibly attempt shorts at 137.15; stop well above 138.00. Short term targets 134.00, maybe 133.00/132.50.
GBP
Comment: A second consecutive small ‘doji’ against Fibonacci support, in the middle of the ‘triangle’ and above a large Ichimoku ‘cloud’ adds weight to our view that prices are attempting to base following the most recent correction lower. Now we shall be hoping prices will start holding and closing above the top of the ‘triangle’ with a weekly close above 1.6800 adding considerably to bullish momentum.
Strategy: Attempt small longs at 1.6570; stop below 1.6390. First target 1.6600, then 1.7000.
JPY
Comment: Massive gyrations at a thin, strangely-shaped Ichimoku ‘cloud’, and potentially a strong reversal formation on the weekly charts here and in many Yen crosses. Be very careful.
Strategy: Attempt shorts at 96.15; stop well above 97.00. Short term target 95.00, then 94.00/93.55.
