Short-Term Currency Outlook: October 29, 2012

EUR/USD
EUR/USD" title="EUR/USD" width="630" height="363">
EURUSD: 1.2935

Short-Term Trend: weak uptrend

Outlook:

The sideways consolidation from the Sept top is still considered to be a bullish development that should lead to another move higher. But now, I have adopted a different wave count that suggests the move up from the July low is corrective. Why? Because the consolidation from the Sept top has taken too much time now compared to the previous moves of the same degree that it is unlikely to be a smaller degree wave four.
For this week, we can expect further choppy trading between 1.2800 and 1.3150.

Strategy: The hypothetical long from 1.2925 was stopped out at 1.2940. Stand aside.

GBP/USD
GBP/USD" title="GBP/USD" width="630" height="363">
GBP/USD: 1.6102

Short-Term Trend: sideways

Outlook:

GBP declined below 1.5945 level as we expected but then recovered again. As result the move down from the Sept top is clearly corrective. That means that it is more likely to see another move higher, twd 1.6380 level before the market reversed its trend. The confidence however is small.
On the downside, important support lies at 1.5780, but really the key level is the one on weekly chart: 1.5250. Until that level is taken out, the outlook is neutral.

Strategy: Stand aside.

USD/JPY

USD/JPY" title="USD/JPY" width="630" height="363">
USD/JPY: 79.63

Short-Term Trend: uptrend

Outlook:

In line with our bullish expectations USD broke abv 79.65 level last week. It then came close to the key 80.60 resistance level but couldn't overcome it on first attempt. Still, the daily chart remains in uptrend and the chances are good that this week the market will manage to move abv the 80.60 level. If it can do that, the bulls will be in full control, and gains twd 83.80 will be expected.
On the downside, the key support is just below 79.00/78.80 level. Break there will negate the afore-said bullish view.

Strategy: Holding long from 79.25 is favored. Stop=78.60.