USD/JPY

Chart Levels:

Support 77.00...76.57...75.95…75.31.

Resistance 78.29...78.45...79.00...79.55.

Simply put, this is just not a real market. Not surprisingly at-the-money implied-volatility is very low, as are futures volume and open interest. Prices are hovering under the upper edge of the ‘channel’ that has held since May last year. We continue to watch for signs of topping against the 26-day moving average at 78.40 as all aspects of this weekly Ichimoku ‘cloud’ chart still suggest selling the US dollar against the yen. However, rather than dropping like a stone we expect messy consolidation either side of 77.00, where it has traded for much of the time since late July.

-78.00; stop 78.55; target 76.65


EUR/USD

Chart Levels:

Support 1.3250..1.3212..1.3190..1.3080.

Resistance 1.3570..1.3615..1.3730..1.3855.

‘Triangle’ consolidation under the bottom of the weekly Ichimoku ‘cloud’ hints that we might have to steel ourselves for another concerted downside test, something the moving averages have been suggesting for some time. Note that this year’s low was 1.2860 mid-January and sovereign debt woes are much worse now and a distinct possibility that there are too many Euro shorts out there. Increasingly thin markets are also a problem that must be factored in, as is the possibility of even more ‘leaders’ summits. It is therefore no surprise that at-the-money implied volatility is trading at expensive levels.

+1.3300; stop 1.3190; target 1.3850


EUR/JPY

Chart Levels:

Support 102.50..101.95..100.77..100.00.

Resistance 105.00..105.75..106.80..107.70

‘Triangle’ consolidation this month inside the ‘channel’ that has dominated since April and all aspects of the weekly Ichimoku ‘cloud’ chart suggest being short the Euro against the yen. Though prices held above 102.50 again this week we fear that we may have to prepare for yet another cautious downside probe. How the authorities might react at 100.00 must be considered. Other yen crosses have also held in ‘triangle’-type formations this month and also for most of the time since mid-September, so Eurozone weakness is not the only culprit. Be very careful.

+103.00; stop 102.40; target 107.85


GBP/JPY

Chart Levels:

Support 120.65..119.90..119.00..117.65.

Resistance 122.60..123.55..124.30..125.65.

Sterling holding its own against the yen adding a little weight to our view that this pair is trying to stabilise against 61% retracement support, ahead of September’s record low at 116.80, above the top of the descending ‘channel’. This is likely to be a long drawn-out process so traders and investors must decide whether it is worth their while. Until prices manage a monthly close above 128.00 we shall have to continue to allow for many bouts of cautious downside testing followed by slow rallies. Above 128.00 might trigger a short squeeze to 140.00. Holiday-thin markets another problem.

+120.00; stop 119.00; target 125.50


GBP/USD

Chart Levels:

Support 1.5535..1.5425..1.5345..1.5270.

Resistance 1.5715..1.5780..1.5870..1.5900.

Little to add as Cable consolidates just under the steeply rising bottom edge of the weekly Ichimoku ‘cloud’ and the moving averages suggest a short position. Small mercies perhaps as other currencies get beaten about a bit. While we trade above October’s low at 1.5270, which happens to be just under January’s low at 1.5345, we shall watch for signs of it trying to form another interim base. Generally we favour a lot more broadly sideways moves roughly between 1.5000 and 1.7000, something we witnessed for much of the 1990’s. Record open interest suggest entrenched positions.

+1.5450; stop 1.5245; target 1.5900


EUR/GBP

Chart Levels:

Support 0.860..0.8400..0.8300..0.8175.

Resistance 0.8555..0.8620..0.8665..0.8750.

Supreme patience has paid off and the Euro is at its lowest level against the pound since March. Moving averages are decidedly in sell mode, the bottom of the ‘cloud’ capping today, and the Lagging Span broke below a thin part of the weekly ‘cloud’. A weekly close below 0.8500 will really get things going, possibly creating the potential for a sudden slide down to our first target which remains at 0.8300, with a second measured target at the 0.7800 area possible if bearish momentum increases from its current steady level. On the Bank of England’s Trade Weighted basis sterling remains cheap.

-0.8600; stop 0.8675; target 0.8400