EUR: Attempt small longs at 1.5060; stop below 1.4800

Nicole Elliott from Mizuho Corporate Bank at 11/30/09

Comment: Even better than we had hoped, a fantastic ‘hammer’ against trendline and the Ichimoku ‘cloud’. This suggests an interim low just might be in place and we shall now re-test this year’s high at 1.5145. However, bullish momentum is almost nil at the moment so not quite as clear as we would like, and implied volatility should continue to pick up.

Strategy: Attempt small longs at 1.5060; stop below 1.4800. Short term target 1.5145, then more.

Comment: Pity we did not get decisive weekly closes below the bottom of the large ‘triangle’ and the bottom of the weekly Ichimoku ‘cloud’, here and in nearly all yen crosses. Despite Friday’s strong bounce from a low at 126.95 the Euro is still oversold so allow for a little hesitation early today. The longer we hold below 132.00, the greater the instability and the higher the implied volatility.

Strategy: Attempt shorts at 129.70; stop above 131.35. Short term target 129.00, then 127.00.

Comment: An interim low appears to have formed in Cable at 1.6272, helped by Fibonacci retracement and the Ichimoku ‘cloud’. It is not overbought and bullish momentum has increased slightly, as has implied volatility.

Strategy: Attempt small longs at 1.6575; stop below 1.6200. First target 1.6600, then 1.6800.

Comment: While Friday’s bounce from a low at 84.82 is impressive, it has stalled at the 38% Fibonacci retracement and the 9-day moving average. If we hold below here all day today bearish pressure should increase while a monthly close below 87.00 would be very bearish for the medium term (even though the US dollar is as oversold as it was in November 2007).

Strategy: Sell at 86.25; stop above 87.50. Short term target 85.00, then more towards the all-time low 79.75.