EUR/JPY: Possibly attempt small shorts at 124.10/124.50

Nicole Elliott from Mizuho Corporate Bank at 02/17/10

Comment: Yesterday’s close above the 9-day moving average is the first small sign that Friday’s small ‘hammer’ with a low at 1.3532 might be an interim low point. We continue to urge extreme caution and watch for signs of a dramatic reversal, so that we form a big ‘spike low’ on (hopefully) this week’s candle. Note that futures volume continues above average and open interest rising, suggesting many are late to the party.

Strategy: Attempt small longs at 1.3750; stop below 1.3570. Short term target 1.3800/1.3850.

Comment: Very slow but we are seeing a small short squeeze towards 125.00. Not there yet so we might see some more today, but note that the pace of this move is poor and therefore likely to disappoint.

Strategy: Possibly attempt small shorts at 124.10/124.50; stop well above 125.00. First target 122.50.

Comment: Yesterday’s close above the small ‘triangle’ and well above a plunging 9-day moving average is the first tiny sign that the low at 1.5535 might be a new interim low. Wait and watch for much clearer signs of forming a weekly reversal candle, hopefully by this Friday (or if not by the end of this month).

Strategy: Attempt small longs at 1.5760; stop below 1.5500. Short term target 1.5800, then 1.5900.

Comment: Inching up to a new recent high at 90.52, just above 38% Fibonacci retracement and the 26-day moving average, and very unimpressive. Watch for signs of topping today.

Strategy: Attempt small shorts at 90.35; stop above 90.65. Short term target 89.80, then 89.30/89.00.