GBP: Attempt small longs at 1.6550; stop well below 1.6200

Nicole Elliott from Mizuho Corporate Bank at 10/30/09

Comment: Bouncing from Fibonacci support but certainly not out of the woods yet. Allow for another week or two of consolidation under this year’s high. Meanwhile watch for signs of forming another interim base.

Strategy: Possibly attempt tiny longs at 1.4835; stop below 1.4650. Short term target 1.4855, maybe 1.4900.

Comment: Thrashing around in the middle of this year’s very large ‘triangle’ and either side of a thin Ichimoku ‘cloud’. Watch for signs of topping again around 136.00 for another drop either today or next week.

Strategy: Attempt small shorts at 134.80; stop above 136.25. Short term target 133.00.

Comment: Sterling this week’s best performer so that Cable has crawled its way above a very thin Ichimoku ‘cloud’. It is no longer overbought though momentum is zero and futures volume remains very high suggesting massive speculation. Allow for more of the same today noting that the longer we hold above 1.6200 the more upside pressure ought to build for an eventual break above pivotal resistance around 1.6665. A weekly close above here should add some much-needed bullish momentum.

Strategy: Attempt small longs at 1.6550; stop well below 1.6200. First target 1.6650, then 1.6745.

Comment: Trapped between the 38% Fibonacci retracement resistance and the large Ichimoku ‘cloud’, above the 26-day average at 90.17. Expect it to try and hold above here this morning and maybe all day, but either late today and next week we expect repeated cautious probing of 90.00. Note that the US dollar is not oversold and that momentum has yet to turn bearish so plenty of further downside pressure left over for next month.

Strategy: Attempt shorts at 91.00, adding to 91.50; stop above 91.85. Short term target 90.25.