Comment: The corrective rally from last year’s record low at 1.3450 took prices a lot further, and continued for a lot longer, than we had imagined. It did eventually peak at 1.5600, just above the 1.5400 area we had specified, selling off hard between March and May. Since June prices have been consolidating above trendline support in a small inverted ‘flag’ formation. It now looks set to break below the weekly Ichimoku ‘cloud’, prodded by a raft of other currencies which are also gaining against the beleaguered greenback. At the moment we favour a sharp slide to 1.4100 followed by a slower decline to 1.4000 and then 1.3600.
A weekly close above 1.4650 forces us to review and adjust.
