Market seen at high risk of accelerating lower while the USD has improved its prospects for a broader recovery across board
Central Scenario: The continuous failure to break above Ichimoku-resistance, the row of lower tops and the clearly established bear-trend in risk markets provide a high probability of accelerating lower
With the multiple failure of the red lagging line to break above the Ichimoku-cloud (remember that 2 consecutive closes are required for a break!) and a well established row of lower tops already in place since we topped at 1.4944 in May, this market runs a very high risk of having just built up momentum for acceleration lower. The technical picture in the USD Index since 2008 in the monthly chart is also suggesting that a bottoming formation is unfolding and given the latest developments in risk markets, the turmoil seems far from being oven, what should also be slightly supportive for the USD. Taken all this together we see a very high probability of picking up down-momentum for a minimum decline to 1.3351 (int. 76.4 %), provided the last tops at 1.4537/79 are not broken anymore, what would bring the bullish blue scenario in the spotlight again.
Down Potential: A minimum decline to 1.3351 with the option to extend to 1.3120 (Fib.-projection).
Risk: The market breaks the row of lower tops at 1.4537/79, what would neutralize the prevailing negative bias.
Strategy: Sell 2 units EUR/USD at market, targets 1.3350 & 1.3120, stop at 1.4600
EUR/USD daily chart:
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/08/FX-Tech-Trade-Rec-EUR-USD-120811.pdf
J.P.Morgan
Global FX Strategy