The Risk Today:

The Risk Today:

EurUsd The recent weak patch for the USD has encouraged EURUSD to creep steadily higher off last week’s 1.2588 lows, but as we start to approach notable resistance levels overhead the risks seem to be skewed to the downside and a resumption of EURUSD-selling. Immediately overhead we note that 1.2770-80 harbours a triple threat of sellers from the 50-day moving average, the upper edge of the current 3-week downtrend channel, and Friday’s high; and above there yet more resistance is expected at 1.2810 (upper edge of 1-week uptrend), 1.2880 (back side of former 2-month uptrend) and 1.2930 (12 Aug high and a major resistance level in the middle part of this month). We would therefore prefer to be sellers on rallies towards 1.2770, looking for an imminent return to sub 1.2600 levels in due course. The price is currently hovering on the 100-day moving average 1.2725, but below there only weak 1-week uptrend support is eyed at 1.2675 before Tuesday’s low 1.2588. A slump through that level opens up the path to 1.2522 (13 Jul low) and the 2 & 6 Jul lows of 1.2483.

GbpUsd GBPUSDis still, in our view drifting lower despite the rally off 1.5373 in the past few sessions; it is somewhat encouraging for the bulls that we have managed to claw back above the 200-day moving average 1.5447, but we have yet to see a decent sequence of higher highs and higher lows on the hourly chart. This status quo may however be about to change. We currently sit at a juncture between 1.5560-80 –just above the 2-week downtrend channel, but not yet above the 50.0% fibonacci level (of the rally 1.4229 –1.6000). Should the pair manage to break above 1.5580 then the odds look a lot better that the break of the 2-week downtrend is bona fide and that a return to 1.5715 resistance (12 Aug high) is on the cards.Once that is out of the way then the bulls will find accelerated progress towards 1.5800 (psychological resistance), and 1.5820 (11 Aug relief rally peak). Until the break of the 2-week downtrend gathers momentum though, we still remain cautious that a renewed collapse is possible. First supports seen at 1.5440-45 (Friday’s low and 200-day moving average), 1.5375 (key support throughout last week), and 1.5325 (38.2% fibonacci level).

UsdJpy Interesting times in USDJPY as the spate of JPY-weakness that prevailed at the end of last week actually managed to burst above the 6-week downtrend; however that rally failed to conquer resistance around 85.90 (like the one before it on 19 Aug), and the pair has since slumped rapidly back within the downtrend channel. For the time being we view this trip to the upper end of the 83.60 –85.90 range as an opportunity to sell, anticipating a return towards 84.00 and perhaps another test of 83.60. Below 83.60, the next technical level is seen at the lower edge of the 6-week downtrend (currently 83.10). Really not many technical landmarks are highlighted below as it is an area not explored since 1995. Our short-medium term target (barring the possibility of concerted BoJ intervention/defence) is therefore the 79.75 –80.00 area where the pair bottomed out on that run 15 years ago. Should the relief rally have more steam than we’re giving it credit for, then the next level eyed above 85.90 will be the major resistance at 86.50. Above there, further rallies will be weighed by sellers back towards 86.90 (2 Aug high and 50-day moving average) and 88.00 (psychological barrier and 28 Jul high).

UsdChf The descent continues for USDCHF, with the price action at the end of last week already making a few stabs below the 19 Jan low 1.0229. Although the bears have paused for breath at the start of this week allowing a recovery to 1.0300 levels, we feel that this sell-off is far from over and that another attempt at sub-1.0229 levels is due. We therefore prefer to sell on rallies around 1.0640-50, expecting good protection for short trades above there. Extended rallies are likely to be hindered by resistance through 1.0550 (13 Aug high), 1.0640 (27 Jul high), and 1.0673 (200-day moving average). On the downside, should 1.0229 give way, then next supports anticipated at 1.0131 (11 Jan low), 1.0055 (lower edge of downtrend channel) then 1.0000 significant psychological level.

Resistance and Support:

EURUSD	GBPUSD	USDJPY	USDCHF
1.2930	1.5800	88.00	1.0640
1.2880	1.5720	86.50	1.0550
1.2810	1.5580	85.90	1.0320
1.2730	1.5570	84.87	1.0286
1.2670	1.5440	84.00	1.0220
1.2580	1.5370	83.60	1.0130
1.2520	1.5120	79.75	1.0000
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot