FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Sep 03 08 06:24 GMT |

EURUSD Comment: Losing 10% of its value since July's all-time high, the biggest monthly and quarterly drop ever. One-month at-the-money implied volatility is on its way up again and the Euro is very oversold. We continue to watch warily for signs of basing this week, the deeper we drop initially the sharper the reversal later on. Strategy: Possibly attempt tiny longs at 1.4425; stop below 1.4345. Short term target 1.4700, then 1.4800. Direction of Trade: → Chart Levels: Support Resistance 1.4410* " 1.45 1.4365* 1.455 1.431 1.46 1.42 1.467 1.4125 1.4730* GBPUSD Comment: Cable in free-fall and now the OECD says we can look forward to a recession in H2 2008. This is obviously unsustainable but with the complete lack of support from the authorities who only knows where this chaos will end up. Stand aside if possible and wait until you see the whites in their eyes. Strategy: Possibly attempt the tiniest of longs at 1.7730; stop below 1.7670. Short term target 1.8000, then 1.8200. Direction of Trade: → Chart Levels: Support Resistance 1.7703* " 1.7815 1.76 1.79 1.7565 1.8 1.75 1.808 1.7400* 1.8200* USDJPY Comment: Standing out by a mile as just about the only currency not in free-fall against the USD. Expect messy consolidation between 108.00 and 109.00 today. Strategy: Attempt small shorts at 109.00; stop above 109.75. Short term target 108.00, then 107.55. Direction of Trade: → Chart Levels: Support Resistance 108.43 " 109.08 108 109.19 107.77/107.62* 109.72 107.25* 110.00* 106.6 110.67** EURJPY Comment: Once again dropping like a stone towards March's low. The Euro is terribly oversold and bearish momentum strong. Yen crosses should push each other lower and lower, like dominoes (NZD/JPY lowest since August 2006). 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 157.30, adding to 159.00; stop above 160.25. Short term target 157.00, then 156.00. Direction of Trade: → Chart Levels: Support Resistance 157.12/157.00* " 157.75 156.5 158 155.95* 158.45 155.55 159 154 160.00* Mizuho Corporate Bank