FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Sep 04 08 06:26 GMT |

EURUSD Comment: Working within a downward-sloping 'wedge' formation with a small 'hammer' candle yesterday. We continue to watch warily for signs of basing this week, the deeper we drop initially the sharper the reversal later on. The Euro is still very oversold and at-the-money implied volatility remains well bid. Strategy: Attempt longs at 1.4500/1.4470; stop below 1.4365. Short term target 1.4550, then 1.4650. Direction of Trade: → Chart Levels: Support Resistance 1.4466 " 1.4529 1.442 1.455 1.4385* 1.46 1.43 1.4650* 1.42 1.473 GBPUSD Comment: In a mere six weeks the British authorities have managed to oversee the biggest collapse in Cable since 1992, giving back almost 50% of the rally that started in 2001, dropping a whopping 35 cents from last year's peak. This is obviously unsustainable but who only knows where this chaos will end up. Stand aside if possible and wait until you see the whites in their eyes, probably somewhere between 1.7700 and 1.7500. Strategy: Possibly attempt the tiny longs at 1.7795; stop below 1.7665. Short term target 1.7900, then 1.8100. Direction of Trade: → Chart Levels: Support Resistance 1.7705 " 1.782 1.7667* 1.79 1.76 1.8 1.7565 1.808 1.75 1.8200* USDJPY Comment: Over the last month the Japanese Yen has gained against every major currency, bar none. Quite a feat considering the sudden new fashion for holding US dollars. Two consecutive days where candles have formed small 'spike highs' against 9 and 26-day moving averages at 108.97. This might add to current bearish momentum for a re-test of the 107.50 area, with a break below 107.25 adding quite a bit more downside pressure. Strategy: Attempt shorts at 108.15, adding to 108.45; stop well above 109.25. Short term target 107.55/107..25 then 106.40. Direction of Trade: → Chart Levels: Support Resistance 107.94 " 108.47 107.62 108.97 107.5 109.19 107.25* 109.94/110.00* 106.6 110.67** EURJPY Comment: One of many Yen crosses testing of dropping towards key very long term support. As and when these levels give way, we remind that we take no prisoners and moves are likely to be faster than anything seen since 1997 and 1998. One-month at-the-money implied volatility should move higher, probably sharply so on a break below 154.00. For this morning expect cautious consolidation above 157.00 with rallies to 160.00 seen as selling opportunities for further big declines this month. Strategy: Sell at 157.00, adding to 158.00; stop above 159.0. Short term target 156.00, then 154.00. Direction of Trade: → Chart Levels: Support Resistance 156.47 " 157.42 156.26 158.04 155.95* 158.45 155.55 159 154 160.00* 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.