USDJPY broke 118.22 to target 118.45/41 & October

Daily Forecast - 07 January 2016

USDJPY Spot

USDJPY broke 118.22 to target 118.45/41 & October lows at 118.04/00 & almost as far as 117.50/45. We are severely oversold but only stand a chance of recovery is we can at least stablise above 118.00. We can then look for minor resistance at 118.32/35, perhaps as far as strong resistance at 118.60/70. This is the main challenge for bulls today but shorts need stops above 118.85. Just be aware of very strong resistance at 119.05/15.

A break below the day low so far at 117.69 targets 117.50/45 then 117.24/21. If we continue lower look for 116.85/81, perhaps as far as 116.65.

AUDUSD Spot

AUDUSD hit our targets down to strong trend line support at 7117/12 but stops were activated below 7090 to target 7070/65 & the pair bottomed at 7043. Now oversold with a potentially positive short term candle so a short term recovery is possible today. First resistance at 7081/85 then stronger resistance at 7107/11. Shorts need stops above 7125. A break higher sees 7111/07 work as support to target 7130 then resistance at 7147/50. Look for a high for the day here but shorts need stops above 7170.

First support at yesterday's low of 7045/43 is very minor so be ready to sell a break below to target 7025/20 then more important November lows at 7017/12. There is strong support from here down to 6990 so use this area to exit shorts & try longs with stops below 6975.

EURGBP Spot

EURGBP shot higher again over night as I write to beat minor resistance at 7375/78 & should now target minor resistance at 7392/95. If we continue higher look for 7406/09 then important double top highs at 7416/18. We should be overbought short term so watch for a high for the day. Shorts need stops above 7425. Be ready to buy a break higher however to target 7437/42.

First support at 7378/75 of course but below here risks a slide to good support at 7355/50. Try longs with stops below 7340. If we continue lower look for a buying opportunity at 7319/15. Longs need stops below 7300.

EURUSD Spot

EURUSD has dipped to 1.0775 as I write & must hold here to build a further recovery & target first resistance at 1.0820/25. This is the main challenge for bulls today but shorts need stops above 1.0840. A break higher however sees 1.0825/20 act as support to target 1.8055/60 & perhaps as far as strong resistance at 1.0881/85. A high for the day expected if we reach this far. Try shorts with stops above 1.0905.

Failure to hold above 1.0775 is less positive & risks a slide to good support at 1.0739/35. Again today, longs need stops below 1.0710. A break lower is a negative sell signal, despite oversold conditions & could target 1.0690/87 then 1.0677. If we continue lower look for a test of minor support at 1.0650/46.

GBPUSD

GBPUSD so severely oversold after 3 weeks of losses that it is becoming almost too risky to run shorts, but we must stick with the bear trend while we watch very carefully for a positive signal. A break below 1.4600 certainly cannot be ruled out & targets 1.4585. From here down to the 2015 low of 1.4563 is very important indeed. Exit shorts & try longs within this band in such oversold conditions but we need stops below 1.4550. Obviously a break & CLOSE below 1.4560 keeps bears in control & initially targets 1.4529/25.

I need a bullish confirmation to suggest the bear trend is over in the short term at least, but we are already testing important 5 year trend line support so be careful if running shorts. First resistance at 1.4656/60 then stronger resistance at 1.4688/93. Be careful with shorts here & if you try, use a stop above 1.4705. A break higher targets 1.4720/24 then a selling opportunity at 1.4745/50. Try shorts with stops above 1.4780.