FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Oct 07 08 06:29 GMT |

EURUSD Comment: Dropping to 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. Note that this formation can be seen in many currencies, cross currencies and other financial instruments. The Euro is oversold and bearish momentum its strongest ever. One-month at-the-money implied volatility at 18.10% is at a new record high. Stand aside if possible. Strategy: Do nothing and watch for a dramatic reversal this week, ahead of 1.3360. For those who have to: attempt tiny longs at 1.3485; stop below 1.3400. First target 1.3770, then 1.3900 Direction of Trade: → Chart Levels: Support Resistance 1.3481 " 1.3621 1.3444* 1.3706 1.34 1.377 1.3360* 1.385 1.33 1.3915* GBPUSD Comment: Dipping to a new recent low at 1.7322 yet we still feel there is a chance that in time we shall form a 'double bottom'against the 1.7400 area. One-month at-the-money implied volatility at 17.00% is at its highest in at least 15 years. Cable is oversold and bearish momentum has halved since mid-September. Strategy: Attempt small longs at 1.7535; stop below 1.7300. Short term target 1.7800, maybe 1.8000 Direction of Trade: → Chart Levels: Support Resistance 1.7497 " 1.7655* 1.7445 1.772 1.74 1.776 1.735 1.7839 1.7322* 1.7878 USDJPY Comment: One-month at-the-money implied volatility at 22.00% is close to its highest ever. More of the same today, especially if we get more of a two way market, suggesting we could break above here and hit the 1998 high of 34.75%. The USD is somewhat oversold and momentum is just turned bearish. We favour several vicious swings roughly between 100.00 and 104.00 for another three days. Then lower. Strategy: Sell at 102.85, but only if prepared to add to 104.00; stop above 105.50. Short term target 102.00, then 101.25, then 100.25. Direction of Trade: →↘ Chart Levels: Support Resistance 102.60 " 103.3 102.25 103.75 102 104.25 101.27 104.5 100.22* 105.15* EUR/JPY Comment: Comfortably meeting our downside target at 135.00 and hopefully should consolidate cautiously around here for a few days. Do not hold your breath though as bearish momentum is at a record. One-month at-the-money implied volatility at 21.75% is just a whisper from the 1998 equivalent peak at 23.00%. Strategy: Possibly attempt small shorts at 140.00 but only if prepared to add to 142.00; stop above 144.55. Short term target 138.00, then 136.75 then 135.00 Direction of Trade: →↘ Chart Levels: Support Resistance 139.20 " 140.5 138.3 141.55 137.75 142.5 136.64 143 135.05** 144.00* 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.