USD / JPY Strategy: Stand Aside
Wednesday, August 18, 2010
, Posted by Usman Ali Minhas at 2:27 AM
USD / JPY
Strategy: Stand Aside
USD/JPY continues to see two-way trade around the November 2009 major swing low of 84.84 as the crucial level survives for the time being. While the major trend remains down we could see further sideways activity over the next few weeks as weak shorts are liquidated, with the possibility of a return towards 86.89/88.12 or so before another lower high can form. From there I would expect to see a resumption of the major downtrend through 84.73/84.84, loss of which should then see an attack on the all time low of 79.75 posted in 1995. I would need to see settlement above 89.15 to warn of a stronger rebound back towards 92.88 as a trading range forms, while re-capture of 94.99 would turn the outlook positive on a multi-month basis.GBP / USD
Strategy: SHORT 2 at 1.5818, Objs: 1.5356/1.4893, Stop: 1.5818
Cable is seeing an extension of the decline from the 1.5997 swing high after a brief corrective bounce stalled at 1.5702. The velocity of the breakdown adds weight to the view that the 1.4230/1.5997 May/Aug advance was either a completed correction of the decline from the August 2009 high of 1.7043 or a bullish phase within a sideways pattern dating back to January 2009, and I look for loss of First Thrust support at 1.5408 to signal an attack on outside week support at 1.4948 then the bear trap level at 1.4781 ahead of the 1.4230 major swing low as the major downtrend resumes. I would need to see settlement back above 1.5827 and/or re-capture of 1.5997 to call for a push towards 1.6458 before looking for the top.
EUR / USD
Strategy: SHORT 1 at 1.3175, Obj: 1.2375, Stop: 1.3015
EUR/USD has rejected from just shy of the 1.2931/1.3130 projected resistance band as last week’s long black candle weighs. The largest weekly decline since the November/June slide last week looks to have signalled completion of the correction of the decline from last November’s 1.5144 swing high to 1.1876 at 1.3334 and I continue to look for 1.2931/1.3130 to cap for an attack on outside week support at 1.2151 then the 1.1876 swing low initially as the bear market resumes. Settlement back above 1.3130 and/or re-capture of 1.3334 from here would suggest scope for a push towards the 1.3692/1.4000 region before a top can form.
USD / CHF
Strategy: LONG 3 at 1.0510, Objs: 1.0695/1.0973/1.1435, Stop: 1.0325
USD/CHF is finding some support ahead of the 1.0331 recent swing low as early signs of basing emerge. The rebound from 1.0331 to 1.0626 which followed the loss of downside momentum just below the 1.0435 reaction low posted in April appears to have signalled completion of the decline from the 1.1731 June swing high and is viewed as a bearish phase within a large basing pattern dating back to March 2008. I now look for re-capture of 1.0534 then outside week resistance at 1.0640 to add weight to the basing scenario, with a return to the 1.0897 bull trap level then psychological 1.1500 on the cards as medium-term bulls regain control. Back below 1.0331 from here would allow for a probe towards 1.0130 before basing.
USD / CAD
Strategy: LONG 3 at 1.0350, Objs: 1.0475/1.0663/1.0975, Stop: 1.0225
USD/CAD is seeing further corrective weakness from 1.0494 as last week’s powerful First Thrust pattern is retraced. The swift rebound from 1.0107 trapped sellers of the break of the June swing low at 1.0138 adding weight to the bullish scenario which sees 1.0107 as the end of a corrective pullback from the 1.0853 May swing high and part of a long basing process after the decline from the March 2009 high at 1.3063. I look for the 1.0256/1.0362 area to hold for a return to the 1.0676 reaction high then the 1.0853 swing high, breach of which would confirm the base calling for multi-month gains towards 1.1000 initially as bulls gain control. In the meantime, loss of 1.0256 would again threaten the 0.9930 April swing low as the major downtrend resumes
AUD / USD
Strategy: SHORT 2 at 0.9130, Objs: 0.8880/0.8630, Stop: 0.9130
The Aussie has rejected from the projected resistance band at 0.8978/0.9098 as last week’s powerful First Thrust decline weighs. With the rebound from the May swing low of 0.8067 to 0.9221 seen as corrective and part of a topping process following the long advance dating back to October 2008 I continue to look for 0.8978/0.9098 to cap for an attack on 0.8858, loss of which would put pressure back on outside week support at 0.8633 then 0.8316 ahead of the 0.8067 swing low as a new bear trend gathers pace. In the meantime, settlement back above 0.9098 and/or re-capture of 0.9221 would again threaten an attack on key resistance at 0.9388/0.9406 before a top would again be sought.
GBP / JPY
Strategy: SHORT 2 at 135.40, Objs: 131.15/126.90, Stop: 135.40
GBP/JPY has broken down to new lows for the 137.77 swing after a corrective bounce stalled at 134.81. The breakdown from 137.77 trapped buyers of the 136.41 June recovery high upside break signalling completion of the recovery from the 126.72 May swing low - a move which appears to be a completed corrective bounce within the decline from 163.09. I now look for an attack on the 130.83 reaction low, loss to signal an attack on the 126.72 swing low initially as the bear run resumes over coming weeks. Settlement back above 135.95 and/or re-capture of 137.77 in the meantime would call for a brief probe towards 140.00 before topping.
EUR / JPY
Strategy: SHORT 2 at 112.50, Objs: 109.00/105.50, Stop: 112.50
EUR/JPY is seeing some two-way activity around the psychological 110.00 level as last week’s powerful First Thrust pattern unwinds. The sharp decline trapped buyers of the 113.40 upside break signalling completion of the corrective rebound from the 107.31 June swing low at 114.73 and I now look for 110.94/112.81 to cap prior to seeing breakdown through 107.31, loss of which should see an acceleration lower for 105.61 initially over subsequent weeks as the major downtrend extends. In the meantime, settlement above 112.81 and/or re-capture of 114.73 would call for a push towards 117.00/118.00 before topping, while I would need to see re-capture of 119.43 to signal a more sustainable recovery.
EUR /GBP
Strategy: Buy Stop 3 at 0.8365, Objs: 0.8560/0.8853/0.9340, Stop: 0.8170
EUR/GBP has seen a deep retracement of last week’s potentially bearish First Thrust pattern as secondary demand comes in ahead of the 0.8067 June swing low. While the major trend remains “down” I see a window of opportunity for bulls over the next few weeks, with re-capture of 0.8362 to offer early warning of an attack on key resistance at 0.8531, above which would confirm a major swing low calling for a much stronger advance towards 0.8773 then psychological 0.9000 as medium-term bulls gain control. Failure to re-claim and hold above 0.8362 over the next few weeks would again risk breakdown through 0.8067 for 0.7693 over subsequent weeks.
Spot Gold
Strategy: Stand Aside
Gold remains firm having breached the 1211.00 recent swing high to extend the recovery from the 1157.03 recent swing low. While support at 1203.50 holds up the near-term risk is seen to the upside for a push towards the 1249.40 April bull trap level, settlement above which would suggest scope for a push through the 1265.30 major swing high posted back in June. In the meantime, loss of 1203.50 would add weight to the view that the 1157.03 rebound is a bear market bounce, loss of First Thrust support at 1174.50 then the 1157.03 swing low to then expose 1124.00 then 1085.30 as a new downtrend gets going.
Spot Silver
Strategy: Stand Aside
Silver is working higher having formed a corrective low at 17.827. While the low holds the short-term risk switches to the upside for another crack at the 18.690 minor swing high, above which could see an attack on important swing highs at 19.465 and 19.826 as bulls look to resume the major uptrend. In the meantime, loss of 17.827 would add further weight to the bearish scenario which sees a topping process forming after the long bull market, with pressure then on 17.198/17.337, loss to confirm the top pattern calling for a return to the 16.547 reaction low then 14.660 initially as the downtrend gathers pace.
