Euro/US Dollar
(1.2193) - 07:30 GMT, Sep 17, 2004
EUR/USD - the currency did fall further, support coming in at 1.2120, pretty much per expectation. We also saw a rebound to 1.2200, at which level, the single currency pauses for reassessment of the technical situation. One of the possibilities we were tracking is a large, multi-month triangle which commenced in June. A final downmove to 1.2050 area is needed to complete the pattern, and that is why we hesitate to jump into a bullish mode just now without feeling out the market as to the chances of a downtick happening. So we put in markers to guide us in the decision-making process. Any rally above 1.2270 makes it unlikely that a final downleg to 1.2050 will happen. On the other hand, a fall from the 1.2200 resistance which takes out 1.2140 highly suggests that such a move to 1.2050 will likely take place.
This sounds like a prescription for analysis paralysis, but actually it creates situations for short-term trades with very sharply delineated parameters. For instance, a long trade here at circa 1.2187 may have a stoploss at say 1.2115, or even 1.2135 if risk averse. Or you can initiate longs at a break of 1.2270. Conversely, you can start selling at break of 1.2140, looking for that final move to 1.2050. The slightly longer-term outlook is slightly different however. We favor the outlook which eventually leads to a break of 1.2310, at which point the bias to the upside becomes virtually certain. And on a larger overview, we still maintain that there is no real reason for bulls to celebrate until 1.2530 hypothetical resistance is taken out. This level is shaping up to be the major resistance in the current investment cycle. Take out 1,2530 top in turn, and you get a run-up to the 1.2925 high before year-end.
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Recommendations:
Bought EUR at 1.2181 and 1.2231. Keep stop-loss at 1.2085. Keep profit target at 1.2500.
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British Pound/US Dollar
(1.7925) - 07:32 GMT, Sep 17, 2004
GBP/USD - the currency pair is still savoring a major sentiment reversal after the U.K. retail sales rose 0.6%(m/m) in August, and bested expectations for a 0.4% fall. The technical conditions are more stark here, and are fairly straight-forward. A break of 1.8030 top triggers a new series of advances -- there is no barrier between 1.8030 and 1.8500. We should see a follow-through to 1.8030 from here (1.7945).
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Recommendations:
Stand aside.
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US Dollar/Japanese Yen
(109.64) - 07:34 GMT, Sep 17, 2004
USD/JPY - the currency pair did go on to probe 109.40 trendline support, and may cause a small rally back to just under 110.00 -- this is the general expectations if the triangle pattern we spoke about earlier has not been completed at the most recent sojourn to 110.40. We will take a chance that the pattern is complete, and so we expect the currency pair to break through 109.40 thereafter, and initiate a new series of declines to the downside, which first targets the downside base at 108.75, then breaches support to bring about 107.00 quickly. .
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Recommendations:
Sold USD at 109.57 and 109.96. Move stop-loss from 110.80 to 110.10. Keep profit target at 107.00.
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US Dollar/Swiss Franc
(1.2674) - 07:35 GMT, Sep 17, 2004
USD/CHF - the rally did extend further into 1.2750 and has been lower since then. There is still a chance that the rally may go further towards 1.2800 - 1.2850 resistance area. The downtrend resumes thereafter, and may be bound for 1.2380 next. Expect further declines to 1.2200 further out.
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Recommendations:
Sold USD at 1.2607 and 1.2668. Keep stop-loss at 1.2810. Keep profit target at 1.2200.
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US Dollar/Canadian Dollar
(1.2902) - 07:35 GMT, Sep 17, 2004
USD/CAD -- the sell-off from the 1.3031 high continues to accelerate. The small pause at 1.22885 should give way to more declines later, with the 1.2680 base as next focus.
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Recommendations:
Sold USD at 1.2952 and 1.3024. Move stop-loss from 1.3065 to 1.2965. Keep profit target at 1.2685.
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Australian Dollar/US Dollar
(0.6990) - 07:36 GMT, Sep 17, 2004
AUD/USD - support is now well-established at .6935, and the worst from here, assuming further declines, is a retest of the .6935 base. The outlook becomes significantly more positive if .7050 resistance is taken out. The currency may just go on a do a probe later in the day. A rally towards .7100 - .7130 is still expected to take place thereafter.
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Recommendations:
Bought AUD at 0.6909, 0.6962 and 0.6990. Move stop-loss from 0.6885 to 0.6930. Keep profit target at 0.7225.
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NZ Dollar/US Dollar
(0.6608) - 07:37 GMT, Sep 17, 2004
NZD/USD - no change in view, as the currency prepares for a test of the .6640 top. The currency should accelerate higher as a consquence of a breakthrough. The wide U.S. current account/trade gap, and the outlook of further RBNZ tightening, should continue to underpin the rally as the dollar runs out of steam. The uptrend should be reaffirmed shortly -- the Kiwi should eventually make a move towards the .6750 top, then extend gains towards the .7100 high for the year. If you have to pick a medium-term bet, long Kiwi should be a good candidate from both technical and fundamental perspective.
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Recommendations:
Bought NZD at 0.6464 to 0.6611 (4 observations). Move stop-loss from 0.6520 to 0.6550. Keep profit target at 0.7000.
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Euro/Japanese Yen
(133.75) - 07:38 GMT, Sep 17, 2004
EUR/JPY - the cross has been to as low as 133.20 and may have indeed bottomed out. No change in view -- the cross should rally from here -- the next major focus being the 137.00 - 138.00 major resistance.
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Recommendations:
Bought EUR at 133.91 and 134.02. Keep stop-loss at 132.80. Keep profit target at 138.00.
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Euro/Swiss Franc
(1.5460) - 07:39 GMT, Sep 17, 2004
EUR/CHF - the cross ratcheted up to 1.5467, and should continue the upwards course. The cross should then push through to1.5550 and higher -- perhaps to 1.5600.
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Recommendations:
Bought EUR at 1.5416. Keep stop-loss at 1.5390. Keep profit target at 1.5600.
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Euro/British Pound
(0.6800) - 07:39 GMT, Sep 17, 2004
EUR/GBP - the cross found support at .6780, but allow for further decline to .6770 - .6760. Nonetheless, the uptrend resumes thereafter and should eventually push through .6856, which may trigger a rally to .7000.
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Recommendations:
Stand aside.
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British Pound/Japanese Yen
(196.75) - 07:40 GMT, Sep 17, 2004
GBP/JPY - the currency pair may have bottomed at 195.15. A base has already formed -- the uptrend should get back on track, makes a go at 198.65 top, then make a beeline for the 205.00 target.
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Recommendations:
Buy GBP at 196.75. Stop-loss: 195.10. Profit target: 205.00.
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British Pound/Swiss Franc
(2.2724) - 07:41 GMT, Sep 17, 2004
GBP/CHF - the cross finally consolidates after it broke through the 2.2700 resistance; we might see the rally extending further from here (2.2765). Resistance effectively reside at just below 2.2800, and if taken out, we reinstate a 2.3000 target.
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Recommendations:
Stand aside.
