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GBP: Possibly attempt small longs at 1.6125

Nicole Elliott from Mizuho Corporate Bank at 01/29/10



Comment: Dropping to a new recent low as the Euro is sold against several other currencies which are not following suit (though of course the US Dollar Index is). Over the next few weeks we feel the Euro should stabilise and form a new interim low but this could be a slow, nerve-wracking process with a series of cautious downside probes. More of the same today, the deeper the probe the more likely we are to find an interim ‘spike low’. Watch and wait.

Strategy: Do nothing but if you have to possibly attempt small longs at 1.3955; stop below 1.3900. Short term target 1.4000, then 1.4180.


Comment: Very disappointing with minimal follow-through from Wednesday’s ‘hammer’ with another cautious downside probe yesterday and today. Note also that downsidemoves here are relatively small denoting instability. Though the Euro is extremely oversold bearish momentum is very strong indeed. Only a weekly close below 126.50 will set off the next leg lower.

Strategy: For the brave: possibly attempt small longs at 125.70; stop below 124.00. Short term target 127.00, maybe 128.00.


Comment: Disappointing as Cable remains stuck under a now thickening Ichimoku ‘cloud’. Prospects today look no better. A weekly close above 1.6300 is the bare minimum needed to get out of the current impasse.

Strategy: Possibly attempt small longs at 1.6125; stop below 1.6070. Short term target 1.6265/1.6300.


Comment: Hovering above the 50% Fibonacci retracement support and the top of a relatively thin Ichimoku ‘cloud’. Yesterday the 9-day moving average capped and might well do so again today. Next month we still expect a drop to 61% retracement (88.25).

Strategy: Sell at 89.95, adding to 90.45; stop above 90.85. Short term target 89.65, eventually 88.50/88.25.

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