Wow, some volatile moves today eh?

As I type cable is being knocked down to the lowest in three weeks as the BOE doves flap their wings. We’ve broken back through the August 2009 resistance line and could well be looking at a test of the Scotland fear low at 1.6050.

Standing in the way of that is the 100 wma at 1.6089and after that there’s the confluence of the old Apr 2011 resistance, 50.0 fib of the Jul 2013 swing up and the 200 wma all around 1.6000/10

GBP/USD Weekly chart 02 10 2014

GBP/USD Weekly chart 02 10 2014

I’m still favouring these levels for a long position and we’re close enough now that we could have a look there either today or more likely tomorrow over NFP. I prefer to lean my trades against the longer timeframe tech levels as they are obviously stronger than the shorter time frames. Given the current trend I’m undecided whether to start to build a position or keep this trade fairly tight with a stop possibly under the 55 mma at 1.5925.

USD/JPY has taken quite a knock today and the dip buyers are really being put to the test. The manufacturing data slump yesterday looks to have been what lit the touch paper and the sellers have jumped in with both feet.

USDJPY Daily chart 02 10 2014

The 108.30/35 level was support a couple of weeks ago and is holding up the bottom now. If this fall is to continue then sellers will need to push the pair below here, the next minor support level at 108.25 (23 Sep low), and 108 to really get the longs worried.

There’s plenty of levels on the chart to park your dip buying longs, but the 105.20/50 area looks to be the strongest if we go there.

And so on to EUR/USD who looks to be kicking back with the popcorn and waiting for the show to unfold around it. With all eyes on the ECB soon there’s unlikely to be any policy changes and it will be Draghi’s silver tongue that will drive any moves later.

Resistance, as we’ve seen today is around 1.2670/75 and there will be more at 1.2700 then stronger at 1.2740/50 and 1.2770

EUR/USD Daily chart 02 10 2014

EUR/USD Daily chart 02 10 2014

I’ve been noting recently that Draghi has been putting more emphasis for Europe’s recovery back onto national governments and Adam picked up on more of the same last night.

In my view he’s been very late in doing this as strongly as he’s starting to now. The ball for Europe’s economy should have always been planted at the feet of member states and not at the ECB. The problem for Draghi now is that if he’s gets too strong with states the market might see that as a sign that the ECB is running out of tools and time to fix the mess. If that happens then the euro is really going to get spanked and we’ll be going through the fear of Eurozone Collapse MKII.

The ECB still have the dice but they’re running out of throws