USD/JPY

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

Entered Short as above. USD/JPY remains vulnerable having formed a bearish reversal week negating the previous week’s potentially bullish lower shadow on the weekly candles. While last 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 towards head and shoulders neckline support at 88.14 and possibly psychological 90.00 before renewed selling pressure emerges.


GBP/USD

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

Cable remains vulnerable as the decline from the 1.5997 swing high grinds lower as the GBP underperforms across the board. While last week’s 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 1.4230/1.5997 corrective move. I would need to see settlement back above 1.5575/1.5769 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 has seen an extension of the recover from the 1.2588 recent swing low to probe the 1.2774/1.3080 resistance window as the decline from 1.3334 unwinds further. While choppy activity could ensue over the short-term I continue to expect the upside to be limited 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. While last week’s 1.0309 high 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 further erosion following the second successive failure near the 1.0676 July reaction high. 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, and I look for re-capture of 1.0518 then 1.0673/76 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. I would need to see the loss of 1.0107 to turn bearish, with risk of breakdown through the 0.9930 April swing low in a resumption of the major downtrend.


AUD/USD

Strategy: Stand Aside

Pressure remains on the upside in the wake of last week’s First Thrust pattern which has seen a weekly close back above resistance at 0.9068. While support at 0.9018 holds the immediate risk is seen to the upside for a crack at the 0.9221 recent swing high, breach of which would put pressure back on key resistance at 0.9388/0.9406 before a top would be sought. In the meantime, loss of 0.9018 would suggest upside failure, with risk then for a crack at 0.8770/0.8860, loss of which would confirm a top calling for a return to 0.8633 then 0.8316 ahead of the 0.8067 swing low.


GBP/JPY

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

GBP/JPY remains vulnerable following last week’s potentially bearish outside week pattern. 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: SHORT 3 at 108.50, Objs: 106.50/103.50/98.50, Stop: 110.50

Entered Short as above. EUR/JPY has seen choppy action of late as the rebound from the recent swing low corrects the 114.73 bear leg. With the decline from 114.73 seen as the next leg of the major downtrend from 139.22 following a corrective rebound from 107.31 I continue to expect to see 110.08/111.57 cap prior to seeing breakdown through 105.40 for an extension of the bear market 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 2 at 0.8240, Objs: 0.8490/0.8740, Stop: 0.8240

EUR/GBP looks buoyant after last week’s powerful First Thrust pattern which confirmed a solid low. With the recent low at 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 support at 0.8236 to hold prior to seeing 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 has extended gains following the bullish reversal week to test bull trap resistance at 1249.40, although early signs of stalling are noted. Still, 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 remains in bull mode having seen an acceleration higher to clear the May swing high at 19.826 as follow-through gains unfold after the breach of the May swing high at 18.690. With the bias firmly to the upside I look for old resistance at 18.690/19.465 to hold for an attack on the March 2008 major swing high at 21.335 over subsequent weeks as the major uptrend looks to extend. In the meantime, loss of 18.690 would suggest that an important top could be forming after the long bull market, with focus then turning to key support at 17.198/17.337, loss of which would be very negative for Silver.