USD/JPY
Strategy: Sell Limit 3 at 84.90, Objs: 83.85/82.27/79.65, Stop: 85.95
USD/JPY has seen a deep retracement of last week’s potentially bullish lower shadow candlestick suggesting that the recovery from the new extreme of 83.60 has failed at 85.91. While this week’s recovery high at 85.91 caps the short-term risk is seen to the downside with risk of losing 83.60 for an attack on the all time low at 79.75 (posted in 1995) over coming weeks as the major downtrend extends. In the meantime, re-capture of 85.91 would suggest that a bear trap may have formed below the old swing low of 84.84, increasing the risk of a powerful short squeeze for broken head and shoulders support at 88.14 before renewed selling pressure can emerge.
GBP/USD
Strategy: SHORT 1 at 1.5818, Obj: 1.4893, Stop: 1.5633
Exited 1 unit of Short position at 1.5356 and lowered stop to 1.5633. Cable has breached last week’s low at 1.5372 to negate the potentially bullish lower shadow on the weekly candles. While the intra-week high at 1.5575 caps the short-term risk is seen to the downside for a crack at outside week support at 1.4948 then the bear trap level at 1.4781, loss of which would expose the 1.4230 major swing low as the 1.7043 bear trend extends after the 1.4230/1.5997 correction. I would need to see settlement back above 1.5575/5769 or re-capture of 1.5997 from here to turn positive on a multi-week view, with focus then back resistances at 1.6458/1.6878 before topping.
EUR/USD
Strategy: SHORT 1 at 1.3175, Obj: 1.2375, Stop: 1.3015
EUR/USD continues to see choppy activity in the wake of last week’s potentially bullish reversal pattern which confirmed a temporary swing low. While further side/up action may ensue over the short-term I continue to expect the upside to be limited to the 1.2774/1.3080 area prior to a resumption of weakness through 1.2588. With the recent swing high at 1.3334 seen as the end of the 1.5144/1.1876 correction I continue to look for eventual breakdown through 1.2588 for an attack on outside week support at 1.2151 ahead of the 1.1876 swing low as the downtrend resumes. Settlement back above 1.3080 and/or re-capture of 1.3334 from here would suggest scope for a push towards the 1.3692/1.4000 region before a top can form.
USD/CHF
Strategy: Stand Aside
USD/CHF continues to push lower as the CHF outperforms across the board. The recent loss of support at 1.0331 confirmed a reaction high at 1.0640 signalling further weakness over the short-term, with risk of seeing the 1.0130 area before a base can be attempted ahead of the November swing low at 0.9919. Further out the decline from the 1.1731 June swing high is viewed as a bearish phase within a large basing pattern dating back to March 2008 and I look for re-capture of 1.0451/1.0534 from here to suggest that a major low is place. I would then turn my focus to the 1.0640 reaction high, above which would put pressure on the 1.0897 bull trap level ahead of psychological 1.1500 as medium-term bulls regain control.
USD/CAD
Strategy: Buy Limit 3 at 1.0580, Objs: 1.0690/1.0855/1.1130, Stop: 1.0325
USD/CAD is pressing the upside again to negate last week’s potentially bearish upper shadow on the weekly candles. While price action may remain choppy over the short-term the longer-term outlook remains positive as the pullback from 1.0853 to 1.0107 is viewed as part of a long basing process following the long decline from 1.3063. I look for re-capture of 1.0667/1.0676 to signal an attack on the 1.0853 swing high, breach of which would confirm the base calling for multi-month gains towards 1.1000 initially. In the meantime, loss of 1.0472 would call for a deeper setback as the range drags on, while losing 1.0107 would threaten the 0.9930 April swing low in a resumption of the major downtrend.
AUD/USD
Strategy: SHORT 3 at 0.8925, Objs: 0.8815/0.8650/0.8375, Stop: 0.9035
Entered Short position as above. Pressure back on the upside again as last week’s potentially bullish reversal pattern buoys. While further side/up action could be seen over the next week or so I continue to expect gains to be limited to the 0.8919/0.9068 region prior to breakdown through 0.8770 as the next leg of the 0.9221 decline extends. With the rebound from the May swing low of 0.8067 to 0.9221 seen as part of a large topping process following the long advance dating back to October 2008, I look for an attack on outside week support at 0.8633 then 0.8316 ahead of the 0.8067 swing low. In the meantime, settlement back above 0.9068 or re-capture of 0.9221 would again threaten an attack on key resistance at 0.9388/0.9406.
GBP/JPY
Strategy: SHORT 1 at 135.40, Objs: 126.90, Stop: 133.70
GBP/JPY is seeing a return to weakness after failure to extend the rebound from the recent swing low of 128.76 much beyond 133.27/133.32 (last week’s high/50% retracement). With the 126.77/137.77 advance seen as a completed corrective bounce within the long decline from 163.09 I continue to look for much lower levels over coming weeks, with 131.73/134.71 expected to cap for an attack on 128.76 then the 126.72 swing low, loss of which should then seen an extension of the major downtrend towards psychological 120.00 in due course. Settlement back above 134.71 and/or re-capture of 137.77 in the meantime would suggest that and important low has formed, calling for a return to 145.96 initially.
EUR/JPY
Strategy: SHORT 2 at 108.50, Objs: 103.50/98.50, Stop: 108.50
EUR/JPY is back on the defensive after the recovery from the 105.42 recent swing low stalled at resistance coming in from 108.88/110.08 (last week’s high/50% retracement). With the decline from 114.73 which punctured the 107.31 June swing low seen as the next leg of the major downtrend from 139.22 I continue to expect 108.50/111.57 to cap prior to seeing breakdown through 105.40 for an extension of the move towards 99.89/100.00 (June 2001 low/psychological) over coming weeks. I would need to see settlement above 111.57 to suggest that a base may be forming, although bulls still need to clear 114.73 to signal a more sustainable recovery going forward.
EUR/GBP
Strategy: LONG 3 at 0.8240, Objs: 0.8340/0.8490/0.8740, Stop: 0.8140
Entered Long position as above. EUR/GBP has extending gains following last week’s potentially bullish reversal pattern to breach resistance at 0.8236 to confirm a swing low at 0.8142. The immediate risk is seen to the upside for an attack on 0.8362 then key resistance at 0.8531, above which would confirm a major base pattern calling for a stronger advance towards 0.8773 then psychological 0.9000 as medium-term bulls gain control. Loss of 0.8142 in the meantime would again expose the 0.8067 June swing low, loss of which could then see breakdown towards support at 0.7693 over subsequent weeks.
Spot Gold
Strategy: Stand Aside
Gold remains buoyant having extended gains after last week’s bullish reversal pattern confirmed a solid reaction low at 1210.30 within the recent advance from the 1157.03 swing low. While 1210.30 holds the bias remains to the upside for an attack on the 1265.30 major swing high posted back in June, clearance of which would re-open the 1300.00 handle next as the major bull run extends. In the meantime, loss of 1210.30 from here would lend credence to the view that the 1157.03 rebound is part of a topping process, with pressure then on First Thrust support at 1174.50 then the 1157.03 swing low initially as a new downtrend gets going.
Spot Silver
Strategy: Stand Aside
Silver is seeing an extension of gains on the back of last week’s potentially bullish outside pattern which saw the penetration of swing high resistance at 19.465. While outside week support at 17.755 holds the immediate risk is to the upside for an attack on the May swing high at 19.826, above which would call for an extension of gains towards the March 2008 major swing high at 21.335 over subsequent weeks. In the meantime, loss of 17.755 would suggest that a top pattern is forming after the long bull market, with pressure then on 17.198/17.337, loss to confirm the top pattern calling for a return to the 16.547 reaction low initially.
