JPY: Attempt small shorts at 91.40; stop above 91.75

Nicole Elliott from Mizuho Corporate Bank at 10/22/09

Comment: Posting a new high for this year at 1.5047 with the 9-day moving average once again giving it another little leg up. Interestingly the Euro is not overbought and bullish momentum is fairly strong. Futures volume is about triple what it was at the beginning of this century, but not open interest, suggesting a lot of small speculators. Many have missed the US dollar’s generalised weakness.

Strategy: Attempt small longs on a dip to 1.4935/1.4900; stop below 1.4800. Add to longs on a sustained break above 1.5050 for 1.5245 short term.

Comment: An initial squeeze higher yesterday and now watch for signs of topping between current levels and ‘triangle’ resistance at 138.00. Then dropping next week and very tricky to trade.

Strategy: Possibly attempt the tiniest shorts at 137.00; stop above 138.15. Short term target 135.00.

Comment: Bursting through a thin Ichimoku ‘cloud’, the rally of the last seven days overwhelming many. We believe US investors see the pound as the only cheap currency into which they can diversify their savings, as both the dollar and sterling hover close to their lowest ever levels on a trade weighted basis. Cable will probably stall today around decent resistance at 1.6665, a level that held for most of the time since June. Then higher if not next week then next month as moving averages cross to bullish.

Strategy: Attempt small longs on a drop to 1.6500; stop below 1.6240. First target 1.6600/1.6665.

Comment: Inching to a new recent high this morning keeping a wary eye on 91.65 which should provide decent resistance. We shall continue to watch for signs of topping, creating yet another interim high. Note that the lower edge of a descending Ichimoku ‘cloud’ and moving averages still suggest a short position.

Strategy: Attempt small shorts at 91.40; stop above 91.75. Short term target 90.00, then 89.50/89.25.