Bank Recommendations 13.11.2006

Deutsche Bank

EUR USD (1.2875) The single currency cracked the $1.29 mark in the European session on Friday as traders again turned to Chinese diversification talks, which had been reverberating through the market for most of last week. For many market participants the mere fact that the Chinese currency reserves surpassed the $1,000bn mark on Monday created an expectation that something had to happen. It is therefore hardly surprising that traders only had ears for comments from China and that it ended up being the focus of attention. Nevertheless, the latest bout of excitement came as the PBoC governor said that plans to diversify the currency reserves had been in place for years and that the country does not plan to accelerate the diversification. Thus, the fascination with China seems to be less about diversification and more about the belief that the euro is finally fighting its way up and might break free from the range. The higher volatility is also testimony to range-betters’ fear that a trend might finally be in sight. The upside remains open for further gains and our second target still stands at 1.2975. This point also serves as the trigger for further strength to 1.3290. In the event of weakness, our tightened risk-limit to the bullish orientation at 1.2810/20 should not be violated.

USD JPY (117.30) It seems as if the dollar is also suffering from diversification fatigue. At least, the belief has been reignited that the renminbi is undervalued and must strengthen, dragging the yen up ‘automatically’. The dollar’s continued weakness towards the end of the week saw it moving fractionally below our tightened risk-limit.
For the time being, we opt for a neutral position. Any sign of further weakness will run into support at 116.90. It is only beneath the critical 116.15 level where we would opt for a bearish strategy. We expect to see selling interest at 117.90 as well as at 118.90 in the event of a rebound.

EUR JPY (151.05) The day-trader preference for short positions following any move to a new highs, was still alive an kicking on Friday. These sales pushed it back further and left it just under the 151.00 level. This morning the better than expected Japanese current account surplus, further justified shorting the cross. It is very possible that a short - squeeze, similar to the one that hoisted the euro to fresh highs on Thursday could be repeated. This time, we set our sights on 151.85 and 153.65. To the downside, supports are visible at 150.50 and 149.35 (critical).

GBP USD (1.9130) Sterling rushed to a 1.9175 high on Friday, where it ran into a round of fresh sales. The latter was blamed on the BoE’s neutral tone on the future of rate hikes. However, many traders clearly forgot that UK data releases prompted market participants not the BoE to speculate about further hikes. We remain bullish on Cable for target 1.9380. On its way up, intermediate supply lies at 1.9200. The risk-limit is now tightened to 1.9040.

AUD USD (0.7665) The A$ remains in corrective mode, but one can count on supports at 0.7645 and 0.7590. To the upside 0.7730 marks the bullish trigger for gains to 0.7850.

IFR Markets

EUR/USD
1.2880 has stalled gains late Asia and the long trade is under water. Hourly studies have toppled from overbought levels and now show risk for deeper pullbacks. The daily charts continue to favor the topside for now but ashooting star reversal pattern on the candles and overbought studies advises caution. Flat fails for profit if given the chance.

Resistance:
1.3035(M) 2% MA Band Top Take Profit, Buy Break
1.2940(S) Daily High Aug 21 Flat On A Failure
1.2910(M) 1% M/A Band Flat On A Failure
1.2900(M) Daily High Nov 10 Flat On A Failure

Support:
1.2820(M) Daily High Nov 7 Sell Stops Below
1.2750(M) Daily Low Nov 7, 8 Buy Bounce, Sell Break
1.2680(M) Daily Low Oct 31 Cover On A Bounce
1.2645(M) Daily High Oct 20 Cover On A Bounce

USD/JPY
117.10 have propped ahead of the 117 mark and the pair is rallying again intraday. Resistance is at 117.65 but we continue to favor the sell strength strategy as another run towards the Ichimkou Cloud base and the 200-day MA remains on the cards. Keep stops relatively tight as trend indicators are close to oversold levels
Resistance:

118.75(M) Daily High Oct 27 Flat On A Failure
118.60(S) Daily High Nov 9 Sell A Failure, Buy Break
118.00(M) Daily High Nov 10 Sell A Failure
117.65(M) Failure High Nov 10 Sell A Failure

Support:
117.00(M) Daily Low Nov 3 Buy A Bounce, Sell Break
116.60(M) Low Nov 1, Cloud Base Cover On A Bounce
116.25(S) 200-Day M/A Cover On A Bounce
116.05(M) Daily Low Sept 22 Take Profit, Sell Break

GBP/USD
Longs are in play. 1.9155 has stalled price action overnight though and support around 1.9100-05 has given onto pressure. Hourly studies are bearish and suggest that a retest 1.9065 is possible which is where our stops are. The daily charts are overbought but we could still see a run towards 1.9180 again. Will take opportunity of upticks and flat fails.

Resistance:
1.9325(M) Highs Mar 8 & 9, 05 Take Profit, Buy Break
1.9295(M) Daily High Mar 16 05 Flat On A Failure
1.9215(M) Daily Highs Apr 20 & 21 05 Flat On A Failure
1.9180(M) Hourly High Nov 10 Flat On A Failure

Support:
1.9065(M) 10-Day MA Buy Bounce, Sell Stops
1.9040(M) Daily Uptrend (1.8525) Sell A Break Below
1.8975(M) Daily Low Nov 9 Cover On A Bounce
1.8950(S) Daily Low Nov 6 Cover On A Bounce

USD/CHF
Supported around the 1% MA band base and the base of the Bollinger Band at 1.2345/50. Rebounds however have been limited to 1.2420/225 and now consolidating between these barriers. Hourly studies are bouncing so could now see a run towards 1.2440 again. Selling strength still favored for an initial 1.2290 target.

Resistance:
1.2560(M) Dntrend Line Fm Oct 13 Flat On A Failure
1.2525(M) Daily High Nov 8 Flat On A Failure
1.2470(M) 10-Day MA Buy A Break Above
1.2440(M) Daily Low Nov 7 Sell A Failure

Support:
1.2345(M) 1% MA Env Base, BB Sell A Clear Break
1.2290(M) Range Low, Dly Low Sept 25 Cover On A Bounce
1.2275(M) Daily Low Sept 4,7 Cover On A Bounce
1.2230(S) Daily Low Aug 31 Cover On A Bounce

EUR/JPY
Supported ahead of previous strong resistance at 150.75 and the cross is rallying again. Hourly studies are bullish and favor a move to at least 151.45 intraday. Daily charts however are likely to thwart the bulls as overbought levels are tested and Friday"s price action posted a lower high and close. Caution prevails for longs.

Resistance:
153.30(M) 2% MA Band Top Flat On A Failure
152.65(M) Aug 98 Lo, LT Chnl Top Take Profit, Buy Break
151.80(M) 1% M/A Band Flat On A Failure
151.45(M) Daily High Nov 9 Buy A Break Above

Support:
150.75(M) Aug 31, Oct 27 Highs Buy A Bounce
150.60(M) Daily High Nov 6, 7 Buy A Bounce
150.20(M) Daily Low Nov 7, 8 Buy A Bounce
149.90(M) Daily Low Nov 6 Buy A Bounce

EUR/GBP
Price failed to sustain the higher levels on Friday and now trades a tight 0.6720/30 range from Asia into London. Minor support is seen at 0.6715 and the 21-Day MA comes in at 0.6710. With hourly studies rolling over we are looking for this region to come back under threat. Bullish momentum has waned on the daily charts and advice is to flat any failures.

Resistance:
0.6820(M) Failure High Sept 11 Take Profit, Buy Break
0.6795(M) Daily High Sept 29 Flat On A Failure
0.6770(M) Daily Hi Oct 6, 1% Flat On A Failure
0.6745(M) Nov 10 Highm Flat On A Failure

Support:
0.6710(M) 21-Day MA Buy A Bounce
0.6695(M) Daily Low Nov 7,8,9 Sell Stops Below
0.6680(S) Daily Low Nov 2,3,6 BB Buy A Bounce, Sell Break
0.6670(M) Oct 31 Trend Low Cover On A Bounce

EUR/CHF
1.5910 is propping the downside and with hourly studies close to oversold levels then rebounds loom again intraday. The daily charts however continue to head south and selling into strength is the preferred strategy for now. On the downside the double lows at 1.5860 is the level to break

Resistance:
1.6135(M) March 2000 High Flat On A Failure
1.6075(S) Channel Top Take Profit, Buy Break
1.5990(M) Daily High Nov 7 Sell A Failure, Buy Break
1.5950(M) Daily High Nov 10 Sell A Failure

Support:
1.5910(M) Hourly Dip Nov 11 Expect Stalling
1.5860(M) Oct 19, 31 Lows Sell A Break Below
1.5845(M) 61.8% Of 1.5755 - 1.5990 Cover On A Bounce
1.5825(M) Daily Low Oct 2 Cover On A Bounce

USD/CAD
1.1330 has stalled gains as hourly studies begin to roll over ahead of overbought levels. The daily charts are mixed and lacking a clear directional bias. Trend studies are mildly bullish but from neutral levels so the signal is not that strong. At a push would be a buyer on dips above 1.1175.

Resistance:
1.1460(M) Jul 24 Peak, 1-yr TL Flat On A Failure
1.1420(M) Trend High Oct 17 Flat On A Failure
1.1375(M) Oct 19 Hi, Nov 2 High Sell Failure, Buy Break
1.1335(M) Daily High Nov 9 Sell A Failure

Support:
1.1260(M) Daily Lows Nov 7 & 10 Buy A Bounce
1.1175(M) Daily Low Oct 30, 61.8% Buy A Bounce, Sell Break
1.1145(S) Daily Low Oct 2, 3 Cover On A Bounce
1.1090(S) Sep 27, 28 Lows Take Profit, Sell Break

AUD/USD
0.7640 is close to coming back under pressure although hourly studies are close to oversold levels and we are unlikely to see a push below here just yet. The daily charts are still bearish and we favor the selling into strength strategy. 0.7700 is initial resistance ahead of the 0.7720 level.

Resistance:
0.7795(M) Trend High May 11 Flat On A Failure
0.7770(S) Daily High Nov 1 Flat On A Failure
0.7720(M) Prior Hrly Lo/Hi Sell Failure, Buy Break
0.7700(M) Hrly Hi Nov 10, 50% Fibo Sell A Failure

Support:
0.7640(M) Nov 9 Low, 1% Env, 38.2% R Buy Bounce, Sell Break
0.7560(S) Oct 17 Hi, Oct 24 Low Cover On A Bounce
0.7525(M) Daily Lows Oct 16, 17 Cover On A Bounce
0.7490(M) Daily Low Oct 13 Cover On A Bounce