GBP: Attempt small longs at 1.6295; stop well below 1.6200

Nicole Elliott from Mizuho Corporate Bank at 01/20/10

Comment: Taking many by surprise as the Euro drops below December’s low to the lowest price since August last year. Rather messy but we shall continue to see how prices react around long term Fibonacci retracement levels. Note also how the weekly Ichimoku ‘cloud’ dips dramatically over the coming fortnight but then recovers equally quickly and moves decidedly higher from April 2010.

Strategy: Stand aside if possibly. If not, attempt small longs at 1.4200; stop below 1.4100. Short term target 1.4300, then 1.4400.

Comment: Dropping quickly towards key support between 129.00 and 127.00 having sees a sustained drop below 130.00 today. No wonder Japanese politicians have had several things to say about FX policy. Expect a concerted downside test this month.

Strategy: Sell at 129.35/129.70; stop above 130.50. Short term target 129.00, then 127.25.

Comment: Holding up against the US dollar better than several other currencies, while struggling at the top of the Ichimoku ‘cloud’, and moving averages suggest a long position. Note how this thins by Tuesday and how the Lagging Span could get support from the flat-bottomed ‘cloud’ of 26 days ago. Cable is not overbought and momentum is still not clearly bullish.

Strategy:Attempt small longs at 1.6295; stop well below 1.6200. Short term target 1.6385, then 1.6450.

Comment: Bouncing from 38% retracement support, as expected, and possibly capped today around the 26-day moving average. Expect more work between these two points today, keeping in mind that later this month we expect another drop towards 88.50.

Strategy: Sell at 91.20; stop above 92.05. Short term target 90.60/90.30, then 89.50.