Daily Currencies Outlook: August 27, 2012

1.2515

Very Short-Term Trend: Weak uptrend.

Outlook:
The expected pullback on Friday did occur and our favored long strategy was elected when EUR declined to 1.2515. Now, there is no change in the trend definition: the hourly trend remains weak uptrend. The hourly oscillators are mostly neutral though and the weakness in GBP/USD is a warning sign. So, while holding long still makes sense to me, I think the critical level can now be raised to 1.2495. A break below there will negate the current bullish view and will signal that the downtrend on the daily chart has resumed...

Strategy: Holding long from 1.2515 is favored. Stop=1.2495. target=1.2660

GBP/USD: 1.5811

Very Short-Term Trend: Weak uptrend.

Outlook:
The decline from the last week's top remains corrective and sloppy but it has been much deeper than I expected. As result our hypothetical long position was stopped out. Now, the hourly chart is still mildly positive but the bulls need to move prices abv 1.5855 in order to take control here. My feeling is that this will happen and we will see a rally today. But since we have been stopped out already, I prefer to stay on the sidelines here.

Strategy: The previous long idea was stopped out. Now I prefer to stay out.

USD/JPY: 78.66

Very Short-Term Trend: Weak downtrend.

Outlook:
The hourly chart is still in weak downtrend mode and based on the fact that the hourly oscillators are now on sell signals, a move down is expected today. However, if one takes a look at the daily chart, they will see that we have a sideways market and an important support at 77.90. So, it appears the downside will remain limited at this stage here....

Strategy: Stand aside.

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