Trade Idea: USD/CHF - Selll at 1.0750
USD/CHF - 1.0705
Recent wave: Wave iii selloff from 1.1969 will resume
Trend : Down
Our trading strategy
Sell at 1.0750, Target:1.0620, Stop-loss:1.0800
Despite rebounding strongly from 1.0592 to 1.0987, the selloff from there due to renewed dollar's weakness across the board on recent better-than-expected U.S. auctions signals the correction has possibly ended and bearish bias is now seen for wave iii selloff from 1.1969 to resume to re-test the abovementioned temporary low.
Therefore, we suggest to sell USD/CHF on recovery towards 1.0752 (previous support, now resistace) in anticipation of weakness to 1.0620 where stop is placed at 1.0800. However, only a breach of 1.0860 will consolidate further inside the 395 points range of 1.0592-1.0987. On the upside, a rise above 1.0987 would bring stronger rebound to 1.1057/70 area, however, as long as 1.1158 (wave i bottom) holds, the decline from 1.2298 should resume in anticipation of the active cross buying in chf and bring further weakness to 1.0041 (equality projection of 1.2298-1.0370 measured from 1.1969). Having said that only a breach of 1.1266 (high of 18 May 2009) would alter recent bearish count on the greenback.
To re-cap the erratic selloff from 1.2298 (21 Nov 2008) which is treated as wave 5 of V and is subdivided into wave i:1.2298-1.1158, wave ii:1.1969 and wave iii selloff from there has formed a temporary low at 1.0592 and consolidation would be seen until further weakness to 1.0501 (equality Fibonacci projection level of the intermediate fall from 1.1742-1.0977 measured from 1.1266) and then towards1.0430 (1.618 times Fibonacci projection level of 1.1969-1.1158 measured from 1.1742), however, 1.0370 (29 Dec 2008 low) is likely to hold on first testing in June and bring further choppy consolidation inside 1.0370-1.2298 broad range before a downside breakout of the established range takes place later in Q3.
Trade Idea: GBP/JPY - Buy at 161.00
GBP/JPY - 161.80
Recent wave: Wave 4 rise from 112.08 low (21 Jan 2009) has resumed after the breach of 160.47
Trend : Up
Our trading strategy
Buy at 161.00, Target:162.50, Stop-loss:160.40
The British pound continued to move higher against the Japanese yen without any significant pullback due to the rally in cable (GBP/USD rises to as high as 1.6622, just below recent top at 1.6664). The breach of 160.47 confirms correction was short-lived and ended at 154.91 on Monday, and signals wave 4 from 118.87 (23 Jan 2009) to retrace in intermediate decline from 215.89 has once again resumed and will extend gain to 162.50/60, however, upside will be limited and price shall be capped well below 165.06/166.05 area and bring wave 5 selloff later in Q4. Therefore, we are recommending to buy sterling on pullback for further rise to 162.50 with stop below 160.47 (previous resistance, now support), break will signal temporary top is made and choppy trading will be seen, and thus, weakness to near term support 159.82 may follow, however, 158.45 shall contain pullback this week.
To re-cap the 5-wavers selloff 251.12 (20 Jul 2007), wave 1 is labelled as 251.12-192.60, the rebound from there to 215.89 (23 Jul 2008) is seen as wave 2, and we are tentatively treating wave 3 has ended 118.87 (23 Jan 2009) and the erratic rise from there is marked as wave 4. On the downside, only a breach of 143.11 (18 May 2009) will violate the series of highers highs and higher lows from 118.87 and signal wave 4 is over.
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