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Nicole Elliott from Mizuho Corporate Bank at 01/19/10


Comment: Frustrating as the rally from a large ‘double bottom’ against the record low 55.00 area lasted a lot longer and corrected 61% of 2008’s decline, more than we had originally predicted. Interestingly bullish momentum did nothing but decline last year, suggesting we may be watching a ‘wedge’ formation in the making. Though not overbought small signs of instability last week, here and in a series of yen crosses, with potentially an ‘evening star’ forming this month. A monthly close below 84.25 would add weight to this view suggesting the squeeze to 86.20 was an ‘extension’. Some time in Q1 2010 we favour a drop to through trendline support to 74.00.

A weekly close above 86.00 forces us to review.

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