EUR/JPY: Sell at 129.00, adding to 129.70

Nicole Elliott from Mizuho Corporate Bank at 01/21/10

Comment: Dropping below the flat-topped Ichimoku ‘cloud’ because it drops suddenly to a trough next week. Approaching the 50% long term Fibonacci retracement support so watch how it might react here. The Euro is as oversold as it was in thin markets at Christmas and good futures volume suggests an element of panic.

Strategy: Stand aside if possibly. If not, attempt small longs at 1.4115; stop below 1.4000. Short term target 1.4200, then 1.4300.

Comment: Hovering at important support at 129.00, above ‘channel’ support and the key 127.00 area. Expect more of the same today as investors fret as to what the Japanese authorities might or might not do.

Strategy: Sell at 129.00, adding to 129.70; stop above 130.75. Short term target 128.50, then 127.25.

Comment: Holding up better than what had been this year’s new darlings, trading in the middle of last year’s range and the very long term average. Note how the Ichimoku ‘cloud’ thins by Tuesday and how the Lagging Span could get support from the flat-bottomed ‘cloud’ of 26 days ago. Very good futures volume on Tuesday suggest many are cashing in their chips.

Strategy: Attempt small longs at 1.6275; stop well below 1.6200. Short term target 1.6380, then 1.6450.

Comment: Bouncing from 38% retracement support, hovering at the moving averages where the 9-day one dropped suddenly and should cross to bearish imminently. Expect more messy work at current levels today, keeping in mind that later this month we expect another drop towards 88.50.

Strategy: Sell at 91.45; stop above 92.05. Short term target 90.60/90.30, then 89.50.