Saturday, March 7, 2009

doji on eur; spinning tops for the franc and the yen; downside action for cable.

Last week's calls:
The week left eur/usd sporting a doji, a classic sign of uncertainty. Price never rose high enough to hit my trigger at 1.2850, though you could have tried shorting the gap at 1.2696. Wednesday's 01:00 long black saw the next 11 hours or so trade inside and going long on the upside breakout would have been a good move.
My swissy forecast fared well, my first short at 1.18 broke even, while the second took me all the way down to 1.15 as predicted.
I didn't catch usd/jpy on the way up from 97. But as I said in last week's call, I expected the pair to encounter strong resistance at 100 and I sold the buck on the breakdown of 99 on Thursday morning to close the position at 97.
Left cable alone last week when it failed to hit my target to short.

Patterns line up on the chunnel:
On an aside (charting rather than candles), I am watching for an upside breakout on eur/gbp at around 0.9000. The level has been offering strong resistance for weeks now (this is most clear on the day chart), while the pressure has been ratcheting up in the shape of an ascending triangle. Over on the pair's hourly chart, we've had a descending wedge forming since January and price is closing in and could test the wedges resistance soon. A true breakout of of both resistance lines will find me buying the euro against sterling with a target in the region of 500 pips. There's some background on how the Lloyds TSB bailout could make the upside breakout a more likely event here.
Charts to follow if requested.

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