FX Technical Analysis
EURUSD
Comment: 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, yet attempts at rallying have been pathetic so far. The Euro is oversold and bearish momentum its strongest ever, and Eastern European currencies are hard-hit this week.
Strategy: Possibly attempt tiny longs at 1.3525; stop below 1.3400. First target 1.3700, maybe 1.3900
Direction of Trade: →↗
Chart Levels:
| Support |
Resistance |
| 1.3509 " |
1.3625 |
| 1.3482 |
1.3756 |
| 1.3444* |
1.3786* |
| 1.3360* |
1.385 |
| 1.33 |
1.3915* |
GBPUSD
Comment: Another day, another new recent low at 1.6781 as Cable suffers its biggest annual decline since 1992 (and it's only October). It is oversold and bearish momentum is stronger than it has been in years. Leave things alone if you can as there is a chance of a nasty surprise over the weekend.
Strategy: For those with more money than sense: possibly attempt tiny longs at 1.6825; stop below 1.6740. Short term target 1.7400, maybe 1.7650
Direction of Trade: →
Chart Levels:
| Support |
Resistance |
| 1.6800 " |
1.7 |
| 1.6781* |
1.7125 |
| 1.6745 |
1.7255 |
| 1.659 |
1.74 |
| 1.6565* |
1.766 |
USDJPY
Comment: The biggest sell-off this year and one of the biggest in a long time, yet we feel prices should try and hold above March's low at 95.77 for several weeks. In fact starting this morning the US dollar should try and base between 98.00 and ahead of 96.00. The USD is as oversold as it was in March but bearish momentum not so. Volatility might increase even further were prices to become more of a two-way street.
Strategy: The very brave might want to attempt the tiniest of longs at 99.00; stop/reverse below 98.40 for 98.00, then 97.70 and possibly 96.00. Cover longs ahead of 101.50 and stand aside if possible
Direction of Trade: →↘
Chart Levels:
| Support |
Resistance |
| 98.50* " |
99.85 |
| 97.91* |
100 |
| 97.67 |
100.6 |
| 97.3 |
101.50* |
| 96.86 95.77** |
102.3 |
EURJPY
Comment: Dropping to a new recent low at 132.80, a third downside probe since hitting 135.00. One-month at-the-money implied volatility at 28.50% is at a new record underlining the extent to which cheap Yen has been used for years to invest in higher yielding assets everywhere. There is a small chance of a short squeeze very late today or over the weekend.
Strategy: Possibly attempt tiny longs at 133.75; stop/reverse below 132.70 for 130.60. Cover longs between 138.00 and 140.00 and wait.
Direction of Trade: →
Chart Levels:
| Support |
Resistance |
| 133.40 " |
134.9 |
| 132.80* |
136 |
| 132.55 |
137 |
| 131.25 |
138 |
| 130.60* |
139.10 140.00* |
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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