EUR/USD Strategy: SHORT 1 at 1.3175, Obj: 1.2375, Stop: 1.3015

USD/JPY

Strategy: Sell Limit 3 at 84.90, Objs: 83.85/82.27/79.65, Stop: 85.95

USD/JPY remains vulnerable having seen a deep retracement of last week’s potentially bullish lower shadow candlestick as medium-term downward pressure remains. 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 suggesting scope for a powerful short squeeze, with broken head and shoulders support at 88.14 and psychological 90.00 then possible before renewed selling pressure emerges.

GBP/USD

Strategy: SHORT 1 at 1.5818, Obj: 1.4893, Stop: 1.5633

Cable remains vulnerable having breached last week’s low at 1.5372 to negate the potentially bullish lower shadow on last week’s candle. While the intra-week high at 1.5575 caps the short-term risk is seen to the downside for a crack at 1.4948/1.5000 (outside week support/psychological) then the bear trap level at 1.4781 en route to the 1.4230 major swing low as the 1.7043 bear trend extends after the corrective rebound from 1.4230 to 1.5997. 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 is seeing further side/up activity as last week’s potentially bullish reversal pattern buoys for the time being. While choppy activity with an upward bias could 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 as the decline from 1.3334 extends. The big picture remains negative as the 1.1876/1.3334 rebound is seen as a completed correction of the decline from last November’s 1.5144 swing high, loss of 1.2588 to signal breakdown towards outside week support at 1.2151 ahead of the 1.1876 swing low. Settlement back above 1.3080 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

The recent decline in USD/CHF is starting to show signs of exhaustion on the approach to 0.9919/1.0040 where major support coming in from the November 2009 swing low and long-term trendline support comes in. Still, while 1.0309 caps the short-term risk is seen to the downside, although I continue to expect the formation of a major swing low above 0.9919 for a period of multi-month gains. The decline from the 1.1731 June swing high is seen as a bearish phase within a large basing pattern dating back to March 2008, re-capture of 1.0309 to suggest that a major low is place turning the focus to the 1.0640 reaction high then the 1.0897 bull trap level as medium-term bulls gain control.

USD/CAD

Strategy: LONG 3 at 1.0580, Objs: 1.0690/1.0855/1.1130, Stop: 1.0325

USD/CAD is seeing choppy activity on the approach to the July reaction high at 1.0676 as potentially bearish upper shadows form 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 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: Sell Stop 3 at 0.8940, Objs: 0.8765/0.8503/0.8065, Stop: 0.9115

Pressure remains on the upside 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 stall above 0.9068 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, a weekly close above 0.9068 or re-capture of 0.9221 would again threaten an attack on key resistance at 0.9388/0.9406 before topping.

GBP/JPY

Strategy: SHORT 1 at 135.40, Objs: 126.90, Stop: 133.70

GBP/JPY has broken through last week’s 128.76 low to signal completion of a reaction high at 133.60 as a potentially bearish outside week pattern forms. With the 126.77/137.77 May/August 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 131.65/134.66 expected to cap for an attack on the 126.72 May swing low, loss of which should then seen an extension of the major downtrend towards psychological 120.00 in due course. Settlement back above 134.66 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: Sell Limit 3 at 108.50, Objs: 106.50/103.50/98.50, Stop: 110.50

EUR/GBP

Strategy: LONG 2 at 0.8240, Objs: 0.8490/0.8740, Stop: 0.8240

Exited 1 unit of Long position at 0.8340 and raised stop to cost. EUR/GBP is starting to see the anticipated acceleration higher as follow-through gains are seen following last week’s potentially bullish reversal pattern. With last week’s 0.8142 low seen as a reaction low above the 0.8067 June swing low as part of a large basing process following this year’s decline to date, I look for an attack on 0.8362 then key resistance at 0.8531, above which would confirm the base 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 to test the bull trap level at 1249.40 as last week’s bullish outside pattern buoys. While outside week support at 1210.30 holds the short-term 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 would suggest that an important reaction high has formed below 1265.30 increasing the risk of breakdown towards key support at 1157.03, the loss of which would confirm a major top for Gold.

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 as the recent lateral pattern resolves higher. While broken resistance at 18.690 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 18.690 would suggest that a top pattern could be forming after the long bull market, putting pressure on key support at 17.198/17.337, loss of which would confirm a major top for Silver.

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