EUR: Buy at 1.4500, adding to 1.4455; stop well below 1.4400

Nicole Elliott from Mizuho Corporate Bank at 01/13/10

Comment: Consolidating neatly just above new recent highs, the upside currently limited by the 26-day moving average. Momentum is bullish and the Euro is not overbought. Price action over the last four days can be seen as a ‘pennant’ suggesting another burst higher this week with a measured target of at least 1.4720, maybe 1.4825.

Strategy: Buy at 1.4500, adding to 1.4455; stop well below 1.4400. Short term target 1.4550, then 1.4800.

Comment: Plunging suddenly once again from the 133.50 area, as it did last week, then finding support from the lower edge of the daily Ichimoku ‘cloud’. Interesting that some of the other yen crosses are forming potential ‘bearish engulfing’ weekly candles.

Strategy: Possibly attempt small shorts at 132.25, adding to 133.45; stop above 134.55. Short term target 131.50/131.25.

Comment: A potential, if crooked, ‘double bottom’ as Cable tests the recent high at 1.6242. This is merely the first of many upside obstacles of which the next is a large Ichimoku ‘cloud’. Note that 1.6375 is the mean of the last thirty years so no wonder prices have been hovering around here for seven months.

Strategy: Attempt longs at 1.6210, adding to 1.6140; stop well below 1.6000. First target 1.6240, adding to longs on a sustained break above 1.6250 for 1.6400.

Comment: Going according to plan as prices retreat from ‘channel’ resistance and now closing below recent interim lows at 91.00. While finding support from the 26-day moving average, yesterday’s close has turned momentum bearish. The USD is not oversold so we favour another drop. Note that futures open interest is one third of 2007’s peak showing just how many investors have given up on the ‘carry trade’. Ignore comments on this subject.

Strategy: Sell at 91.15, adding to 91.80; stop above 92.35. Short term target 90.65, then 90.00.