EUR/JPY: Attempt small shorts at 134.50; stop above 135.25

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

Comment: The Euro found support from Fibonacci retracement as Antipodean currencies gap higher over the weekend. Bullish pressure has increased slightly, as should implied volatility.

Strategy: Attempt small longs at 1.4935, adding to 1.4825; stop below 1.4700. Short term target 1.4955/1.4995, eventually this year’s high at 1.5064.

Comment: Hard to believe this is the eighth consecutive month prices hold in a ‘triangle’. With momentum just bearish, the Euro not oversold against the Yen, and a small ‘spike high’ Wednesday should sent this pair back down to 132.00, and eventually more.

Strategy: Attempt small shorts at 134.50; stop above 135.25. Short term target 132.00, then 131.00, eventually another big slide lower still.

Comment: Almost, but not quite, a weekly close above important resistance around 1.6665. As other currencies are doing something similar we shall hope for a weekly close above 1.6835 which will really increase bullish momentum.

Strategy: Attempt small longs at 1.6715, adding to 1.6625; stop well below 1.6500. First target 1.6755, then this year’s high at 1.7044.

Comment: Little to add as we consolidate under a small ‘spike high’ and the descending lower edge of a very large Ichimoku ‘cloud’. Friday’s close below 90.00 has added to bearish momentum and the USD is certainly not oversold. Time for generalised USD selling again today and maybe all this week.

Strategy: Sell at 90.00/90.35; stop above 90.95. Short term target 89.65, then 89.25.