FX Technical Analysis
EURUSD
Comment: Mercifully calm amid mayhem in every financial sector. Still hovering nervously above a new recent low at 1.3444 in what is a potential C leg of an A, B, C-type correction where C is 0.6% of A. The Euro is oversold and bearish momentum its strongest ever, while the Brazilian real has lost 13.4% and South Korean won 12.1% versus the USD over the last 5 days! Central bankers making the smallest possible interest rate cuts, co-ordinated or coerced, underline the fact they have little grasp of the subject and even fewer tools.
Strategy: Possibly attempt tiny longs at 1.3670; stop below 1.3400. First target 1.3700, then 1.3900.
Direction of Trade: →↗
Chart Levels:
| Support |
Resistance |
| 1.3580 " |
1.3702 |
| 1.3515 |
1.3756* |
| 1.3444* |
1.381 |
| 1.3360* |
1.385 |
| 1.33 |
1.3915* |
GBPUSD
Comment: The Bank of England's 50 basis point cut under whelmed. Cable dipped to a new recent low at 1.7173 today and one-month at-the-money implied volatility at 19.09% is at its highest in at least 15 years. Cable is oversold and bearish momentum is picking up again. This is a total mess.
Strategy: For those with lead-lined stomachs: possibly attempt tiny longs at 1.7250; stop below 1.7100. Short term target 1.7600, maybe 1.7800.
Direction of Trade: →
Chart Levels:
| Support |
Resistance |
| 1.7200 " |
1.7317 |
| 1.7173* |
1.7334 |
| 1.71 |
1.76 |
| 1.7045* |
1.7660* |
| 1.7 |
1.7839* |
USDJPY
Comment: Dropping below the psychological 100.00 as the 'carry trade', in the guise of Yen crosses, are unwound at an alarming rate. One-month at-the-money implied volatility at 23.40% is closest to the 1998 high of 34.75% than it has ever been. The USD is very oversold and momentum is clearly bearish. The move lower that we expect looks to have started a little sooner than we had thought. Chaos reigns so only do what you have to do and remember, Japan plc is the nearest thing to a 'safe haven' that we have right now.
Strategy: Attempt small shorts at 100.45, but only if prepared to add to 103.00; stop above 104.50. Short term target 99.60, then 98.60 and possibly March's low at 95.77
Direction of Trade: →↘
Chart Levels:
| Support |
Resistance |
| 100.20 " |
101.25 |
| 99.6 |
101.75 |
| 99.3 |
102.3 |
| 98.9 |
102.85 |
| 98.60/98.56** |
103.30* |
Mizuho Corporate Bank
Disclaimer
The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.
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