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Monthly Technical Outlook

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Monthly Technical Outlook

Fri, Sep 4 2009, 05:37 GMT
by Nicole Elliott

Mizuho Corporate Bank

Monthly Outlook for EUR

Comment: Very dull as the Euro has gone precisely nowhere over the last month, so that consensus opinion remains firmly in favour of the US dollar. Small mercies as it holds above the top of a very large flat-topped weekly Ichimoku ‘cloud’ and 38% Fibonacci retracement. Moving averages support, momentum is a tiny bit bullish, the Euro is not overbought and there is little to impede the Lagging Span from moving higher. A weekly close above 1.4400 should set off a squeeze to 1.4600/1.4800 and probably an extension to the psychological 1.5000.

A weekly close well below 1.3900 would force us to adjust.

Monthly Outlook for GBP

Comment: August was a disappointment as Cable dropped back inside the massive, flat-topped weekly Ichimoku ‘cloud’ and consolidated under the 50% Fibonacci resistance. It should spend the coming month holding between 1.6000 and 1.7000 because momentum is neutral. Eventually we favour a move higher, something that we feel ought to start early October.

A weekly close below 1.6000 forces us to review.

Monthly Outlook for JPY

Comment: Last month’s squeeze to a high at 97.79 probably marks a new interim high continuing the series of lower highs established since mid-2007. Slowly and with big corrections, prices are moving down in a ‘channel’ and we look set to break below July’s low at 91.73. The large flat-topped weekly Ichimoku ‘cloud’ and bearish moving averages will eventually push the US dollar down to our target at 90.00/89.00, ahead of the critical the 87.00/85.00 watershed. The market will probably be tempted to test the mettle of the new Japanese government.

A weekly close above 98.00 would force us to review.

Monthly Outlook for EUR/GBP

Comment: Still holding above the fairly pivotal level at 0.8400, which is two standard deviations from the mean since 1997, and likely to do so for another month (and possibly until year-end). Rallies to 0.8800 and probably no higher than 0.9000 are seen as selling opportunities for an eventual break lower. Only when this pair starts holding consistently below 0.8400 can we label this year’s move above 0.9000 as a massive ‘extension’ and ‘spike high’.

A weekly close above 0.9000 forces us to adjust.

Monthly Outlook for EUR/JPY

Comment: Trading rather more neatly than we had hoped, topping for a third time between April’s high at 137.42 and June’s at 139.26 (high 138.72). We remain within the broad band that has held since April (roughly 126.00 to 138.00) and the next step should be a test of the bottom of the very large, flat-topped, weekly Ichimoku ‘cloud’.

A weekly close clearly above 138.00 forces us to review.

Monthly Outlook for GBP/JPY

Comment: This Yen cross formed a ‘double top’ against 162.50, as expected, and has now broken below ‘channel’ support. This month we expect a re-test of July’s low at 146.70 and possibly the lower edge of the very large, flat-topped Ichimoku ‘cloud’ which lies around 144.00. Further out we favour a break below here so that the cross continues to trade broadly sideways in a broad band until year-end.

A weekly close above 162.50 forces us to review.

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Published on  Fri, Sep 4 2009, 05:57 GMT