FX Technical Analysis

EURUSD

Comment: A small inverted 'head-and-shoulders' on the hourly chart above underlines the fact the Euro is trying to base against 1.2140, the 50% retracement of its rally from the all-time low at 0.8228 in October 2000 to the record high at 1.6040 in July 2008. A high today at 1.2673, shy of our first target at 1.2700, suggests consolidation between here and the 'neckline' this morning. A weekly close above 1.2800, which might be too much for this week, would add weight to our view that we are trying to form a medium term interim base.

Strategy: Attempt small longs at 1.2595, adding to 1.2500; stop below 1.2200. First target 1.2700.

Direction of Trade: →

Chart Levels:

Support	Resistance
1.2500 "	1.26
1.2455*	1.2673*
1.24	1.27
1.2345	1.2740*
1.2295* 1.2140**	1.28

GBPUSD

Comment: Neither the best nor the worst performing currency this week – which is where you want to be in current market conditions. Cable is still clinging to the 78.6% Fibonacci retracement support in a small sideways consolidation. A weekly close above 1.4550 might buy it a little room to breathe and ought to set off a short squeeze to 1.4750.

Strategy: Attempt small longs at 1.4410; stop below 1.4200. First target 1.4500, then 1.4745.

Direction of Trade: →

Chart Levels:

Support	Resistance
1.4300 "	1.4468
1.4248/1.4238*	1.4522
1.42	1.4550*
1.4135	1.4645
1.4100*	1.4745

USDJPY

Comment: It looks like a 'triangle', it feels like nervous consolidation in a massive 'triangle', it is a continuation pattern. Many are hoping that markets that have suddenly collapsed will find support around this year's lows, the rumour mill suggesting some intervention is likely (Australia) or has been seen (Switzerland). Another nerve-wracking weekend lies in store. What would you do? Live in hope or take defensive action? Bearish momentum is currently stronger than it has been since May 2009 and a weekly close clearly below 88.70 would be very, very negative indeed. Then listen for squeals from the authorities.

Strategy: Sell at 90.25 but only if prepared to add to 91.50; stop above 92.15. First target 89.00, then 88.00.

Direction of Trade: →

Chart Levels:

Support	Resistance
90.00 "	90.37
89.7	90.75
89.35	91.00*
88.95*	91.5
87.95**	91.85

EURJPY

Comment: All too many will be looking at yen crosses and stock indices, pointing out how close we are to this year's lows, fingers crossed that chart support will hold. We disagree and feel we have a nail-biting weekend ahead. Yesterday's large 'spike low' at 109.47 is the lowest point since November 2001 a 75% retracement from the all-time low at 88.93 of October 2000 to the all-time high at 169.97 of July 2008. The chart is looking increasingly like a 'right-angled triangle' – a continuation pattern which suggests another leg lower for the yen crosses. This is a market trading at an extreme and desperately looking for direction while the authorities hope for support. A real tussle which increasingly looks as though it will be resolved with a huge clear-out to the downside.

Strategy: Attempt shorts at 113.35, adding to 114.40; stop above 115.65. Target 112.00, then 110.50 and eventually more

Direction of Trade: →

Chart Levels:

Support	Resistance
112.45 "	114.4
111	115
110.85	115.58*
110.49/110.25*	116.5
109.47* 108.70 106.80*	117