Let’s
look to the USD/CHF, USD/JPY, and EUR/JPY for clues to trader behavior.
The USD/CHF says no, risk and the worries of a double dip
recession are still alive and well. The Dow Jones’ rollercoaster could give
Space Mountain a ride for its money at Disney World today with the up and down
price action. Wait until the 3:00pm EST bond close to see where risk is really
and what traders are willing to take into the weekend.
The swissy has continued its march against the U.S. Dollar and
since the dollar remains range-bound on the daily chart - albeit with
considerable volatility - the dollar is essentially going nowhere as the franc
reaches for new lows and a test of the 0.7600 major psychological level.
Past
performance is not indicative of future results
The daily USD/CHF reflects the
continued strength in the franc despite this week’s SNB intervention. Franc
strength is an indication to more risk aversion and that’s also bullish for the
yen.
Continued
USD/CHF weakness can be traded on the 240-minute time frame since this chart is
still moving lower in a “four to six o’clock” downtrend where bounces to the area
between the 20 period SMA and 34 period EMA low can trigger an aggressive and
conservative swing short entry, respectively.
The BOJ has been (so far) more effective in their invention play
but likely has done little but buy time and a bounce for the yen. The USD/JPY
and EUR/JPY rallied this week but have slowly been giving back the gains on
those charts from the intervention. Since this is a unilateral play by the BOJ,
there’s likely an overall feeling that the yen is poised to continue to
strengthen given the risk aversion in the marketplace. It’s my opinion that despite
the intervention, the EUR/JPY and USD/JPY are positioned to continue their
downtrend. The BOJ did their best but you can’t talk a strong currency
down. In fact it’s far easier to talk a weak currency higher but the effects of
either do not last long. The Japanese Yen strength has to fight global
concerns, global slowdowns, and today, a meltdown in U.S. equities.
There could - at best - be a short-term transition in the market
phase on the daily chart as buying support in the EUR/JPY tries to maintain a
112.00 level but the USD/JPY is fairing much better for yen bulls and the
USD/JPY bears.
The Dow’s late-day rally above 100 has helped the euro rally
against the yen and therefore the EUR/JPY is defying gravity with better
success than the USD/JPY. However the current resistance area is showing that
the daily time frame’s 20 period SMA and 34 period EMA low are creating a swing
short resistance zone.
The daily charts for both the USD/JPY and EUR/JPY are maintaining
the clearest market trend reading and a bearish Directional Bias.
Start the discussion! Questions?
Comments. Leave it here at the Daily Forex Trading Edge for Raghee to
personally answer. Using the icons at the top of the article to forward this
update to a friend via email, post it on Google or Facebook or simply print it
out for reading later.
Forex trading is one of
the riskiest forms of investment available in the financial markets and
suitable for sophisticated individuals and institutions. The possibility exists
that you could sustain a substantial loss of funds and therefore you should not
invest money that you cannot afford to lose.
Posted By:
Raghee Horner
Raghee Horner, chief currency analyst for Interbank FX, provides her personal daily trading tips and insights through Dailyforextradingedge.com. An experienced trader with over fifteen years in the markets, Raghee is the co-founder of EZ2Trade Software and has taught her brand of technical analysis and charting strategies to students all over the world. She is an international author and has taught currencies, futures, and equities trading for over a decade.
Let’s look to the USD/CHF, USD/JPY, and EUR/JPY for clues to trader behavior.
The USD/CHF says no, risk and the worries of a double dip recession are still alive and well. The Dow Jones’ rollercoaster could give Space Mountain a ride for its money at Disney World today with the up and down price action. Wait until the 3:00pm EST bond close to see where risk is really and what traders are willing to take into the weekend.
The swissy has continued its march against the U.S. Dollar and since the dollar remains range-bound on the daily chart - albeit with considerable volatility - the dollar is essentially going nowhere as the franc reaches for new lows and a test of the 0.7600 major psychological level.
Past performance is not indicative of future results
The daily USD/CHF reflects the continued strength in the franc despite this week’s SNB intervention. Franc strength is an indication to more risk aversion and that’s also bullish for the yen.
Continued USD/CHF weakness can be traded on the 240-minute time frame since this chart is still moving lower in a “four to six o’clock” downtrend where bounces to the area between the 20 period SMA and 34 period EMA low can trigger an aggressive and conservative swing short entry, respectively.
The BOJ has been (so far) more effective in their invention play but likely has done little but buy time and a bounce for the yen. The USD/JPY and EUR/JPY rallied this week but have slowly been giving back the gains on those charts from the intervention. Since this is a unilateral play by the BOJ, there’s likely an overall feeling that the yen is poised to continue to strengthen given the risk aversion in the marketplace. It’s my opinion that despite the intervention, the EUR/JPY and USD/JPY are positioned to continue their downtrend. The BOJ did their best but you can’t talk a strong currency down. In fact it’s far easier to talk a weak currency higher but the effects of either do not last long. The Japanese Yen strength has to fight global concerns, global slowdowns, and today, a meltdown in U.S. equities.
There could - at best - be a short-term transition in the market phase on the daily chart as buying support in the EUR/JPY tries to maintain a 112.00 level but the USD/JPY is fairing much better for yen bulls and the USD/JPY bears.
The Dow’s late-day rally above 100 has helped the euro rally against the yen and therefore the EUR/JPY is defying gravity with better success than the USD/JPY. However the current resistance area is showing that the daily time frame’s 20 period SMA and 34 period EMA low are creating a swing short resistance zone.
The daily charts for both the USD/JPY and EUR/JPY are maintaining the clearest market trend reading and a bearish Directional Bias.
Start the discussion! Questions? Comments. Leave it here at the Daily Forex Trading Edge for Raghee to personally answer. Using the icons at the top of the article to forward this update to a friend via email, post it on Google or Facebook or simply print it out for reading later.
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Raghee Horner