8/14 Kosei Hashimoto's 'FX Outlook' (3-Currency Analysis)

Mitsumasa Hashimoto's 'FX Outlook' August 14, 2017 08:58

Publisher: Daily Market (Mitsumasa Hashimoto)

[USD/JPY]

(Strategy) Sell USD on a rebound

(Comment)

The weekly chart of USD/JPY closed with a large bearish candle, breaking below the lower bound of the triangle consolidation at 109.30 yen, and a new target around 106.20 yen has formed. In the near term, there is a support around 108.10–108.20 yen that has halted it several times, so even if you go short you should leave about half a position and aim for the 106 yen range. For this to be a false breakout, it would require closing above 112.60 yen, and even in that case the maximum rebound would be up to the upper bound of the original triangle consolidation at around 114.20–114.30 yen.

Also, in the near term the weekly Bollinger Bands lower bound is around mid-108s, so for this reason this week’s mid-108s and below is a flow to unwind shorts and turn the momentum.

This week in a range of 107.90–110.60 yen, selling on rallies in the 110s, with a stop at 111.15 yen, waiting for the 112s. The downside: at 108.00–108.10, unwind half of shorts and re-sell around 109 yen. Conversely, if the daily close ends below 107.90, re-sell above 108 yen. In that case the target would be 106.20 yen as above.

Today in the 108.60–109.50 yen range, selling on rallies near 109.40, stop at 111.15 yen. There will also be additional selling in the mid-110s. If the risk is large, stop at 110.25 yen. On the downside, shorts will be closed due to Bollinger involvement.

[EUR/USD]

(Strategy) Sell EUR on rallies; this week watch only for a range breakout

(Comment)

The weekly chart of EUR/USD closed with a bullish candle with a lower wick, indicating euro weakness is being postponed.

Looking at the current position, the support from around 1.14 has been breached last week, so going forward euro downside risk is high; for the near term, within a 1.1690–1.1910 range with two weeks of wicks. If it closes below 1.1690, selling again becomes the plan.

This week in the 1.1690–1.1900 range, selling on rallies; at the lower end we will lightly cover shorts. From this week onward, euro buying should be limited to probing levels around the mid-1.17s or below to keep shorts.

Sell on rallies above 1.1850, stop at 1.1955. On the downside, buyback below the mid-1.17s.

Today in the 1.1760–1.1850 range, selling on rallies around 1.1830–1.1840, stop at 1.1925. On the downside, buy back about half at 1.1760–1.1770; the rest we will hold to the weekly range's lower bound. Buying is on hold.

[EUR/JPY]

(Strategy) Sell EUR on rallies

(Comment)

The weekly chart of EUR/JPY shows a relatively large bearish candle, indicating euro weakness, but the slightly longer lower wick suggests the pace of decline may slow a bit.

Last week it tried up to 128.05, but ended in the 129s, so the 128.10–128.50 support has strengthened again. It will eventually break, but whether EUR/USD below 1.1690 or EUR/JPY below 128, it will be a chicken-and-egg situation where the remaining currency pairs will be led later. If USD/JPY ends in the 127s, EUR/JPY's decline will follow.

This week in the 128.00–130.50 range, selling on rallies toward the early 130s, stop at 131.55. On the downside, 128.60 and 128.10 support; if it closes below 128, re-sell. There is light support at 127.30, but 125.90–126.10 becomes a possibility.

Today in the 128.60–129.50 range, selling on rallies near 129.40, stop at 130.55. On the downside, buy back about half in the upper 128s and wait for the low-128s.

Buying is basically on hold, but if price is at or below 128.20, a probing buy; stop at 127.90 on close. In the overseas session (after 9 PM), when in the mid-128s, dip buying is a wait-and-see.

Hashimoto Mitsumasa's 'FX Outlook' sales page is here

https://fx-on.com/adviser/detail/?id=8277