Yen weakness toward the end of the 2009

Yesterday EURJPY daily range start with a bottom in early Asian session and the top at lunch time New York session. Forex market yesterday was dominated by USD strength and weakness of JPY against the EUR . Although it seem that EURJPY moved substantially during New York morning session the general movement in yesterday EURJPY price range was equally divided between the three session-Asian, European and New York .

EURJPY formed a declining wedge that originated in late afternoon New York session in the previous day. (the blue color triangle on the chart). The declining wedge has more than three touches each at the top resistance line and the bottom support line indicating a break of the S/R line with follow by a significant move. The break will retest the S/R before continuing its path. EUR penetrate the resistance line at 4:15(3:15 GMT) retest the line at 7:00(6:00 GMT) before moving upward.

Last Week of 2009

After more than 18 months trading using indicators such lag, Double CCI, BB MACD and the stealth Buy & Sell, the end result was not that fantastic and the trading was a bit confusing. The entry was a bit breeze but the exit was a different story-sometimes I exited too early or sometimes too late.

For the next year, I resolved to trade using less indicators as not to confound my tactics and based my strategy on traditional support and resistance (S/R) level either horizontally or diagonally, and chart formations of classical technical analysis. This will simplify my trading plan. The indicators I used will be the BB Macd and lag to determine the overbought/oversold (O/S) market position.

To validate the S/R level or chart patterns in my trading plan I used moving average-9,20,60 and 200 period and pivot points(daily and hourly).

In trading EURJPY my preference for trading session is at the end of Asian session and early European/UK session (5:00 GMT to 9:00 GMT). My profit target for the day is still maintain at 50 pips per day. Further details of my trading plan will be explain as we go along in this blog.

Let us look to my trading on Monday (28^th December) and Tuesday(29^th December).

Monday.

The EURJPY uptrend on the last day of last week-Thursday 24^th December was halted in early New York session. Prices moved downward within a channel that formed a flag pattern up to early Asian session. A flag is a continuation pattern and with a break of the top of the flag border indicated a reversal to the upside. Prices did moved up but it then went sideway forming a horizontal resistance line with a diagonal support line indicating a ascending triangle.

A ascending triangle indicate an upward break-away, but a false break of the diagonal support initiated a rectangle or horizontal channel with the top resistance border at 131.768 and the bottom support border at 131.523. As normally in a false break, the breakout is a minor aberration and price will move to its intended path, upward. Two hours after London open, EURJPY broke the upper resistance line as expected.

Tuesday:

The flag and the horizontal channel did not meet the target price as expected. A consolidating horizontal channel was formed instead, beginning from the mid New York session and end I n late Asian session.

This clearly indicated a low interest in market activity as this week is the last week of the year.

There was a false break of the lower support line of the channel toward lunch time in Tokyo.

The last week of the year is normally a dead market with low activity where traders normally on holiday mood or planning action for next year. A thin market is susceptible to market manipulation where a break of S/R level can be false move.

By the way a false break in the chart patterns is an indication of market choosing the opposite direction for the sizeable move.

In the case of horizontal channel;

1. 1. The majority of the first break of the S/R of the channel is always false.

2. 2. After the break, price move into the same direction for a few candles before it came back into the channel.

3. 3. After price returned to the channel, it penetrate the opposite border.

4. 4. The second break will be follow by a significant move that usually exceed the channel width.

In the triangle formation, after two highs and two lows it is possible to draw lines that will become the border of the triangle. This early triangle identification will create a possibility of making 1 or 2 trades inside the triangle formation by opening position from the top/bottom side in the direction of an opposite side, which will be the target price.

Usually, a real break occur after price has touched each sides three times.

Dubai World Debt

The big story by the end of the month was the announcement by Dubai World, the investment arm of Dubai, that it is having trouble making payments on nearly $60 Billion. The funds were borrowed for various large-scale projects, ranging from man-made islands to massive hotels and skyscrapers, many of which are hemorrhaging money in the wake of the real estate crisis.

The news rattled forex markets with risk aversion is the name of the game which predictably sending “safe-haven” currencies like the Dollar and Yen up, while sending everything else down. The reasoning is that the Dubai debt bomb could easily spread to other emerging market economies, triggering a wave of sovereign defaults and even a second credit crisis. Credit default swaps (which function as insurance against default) on emerging market bonds soared on the news, by 60% for Dubai bonds and 16% for Greece, for example. The situation has been likened to the defaults of Russia in 1998 of Argentina in 2002, both of which massively destabilized global capital markets at the time. Despite the recent gains, financial markets remain shaky and a sovereign default would likely reverberate around the financial world.

The JPY crosses have been a bit oversold in the panic one hour before Tokyo session open but bounced up after the opening on November 27^th (Friday). On the previous day-26^th Nov, EURJPY fall to 129.50 after breaching the descending wedge formation with support at around 131.70 which has been maintained since Nov 19. On the 30^th(Monday) volume was thin and prices moved sideways between 130.60 to 129.00.

Continuation of downtrend for EURJPY

This is my trade on Friday, November 20th.

EUR was on the slide against the USD and JPY since midday US session Nov 18(Wednesday). The slide was arrested by midday European session on Nov 19^th. The subsequent correction carried it into a 61.8% fibo retracement by early Asian session.

From the swing low of 131.72 to swing high of 132.92, EURJPY make a retracement of 61.8% with a engulfing candle on a 30 MTF chart, indicating the minor downtrend is reversing. An engulfing candle at 61.8% retracement of swing high 132.92 to swing low of 132.20 point to a possibility of the continuation of the downtrend.`(refer to the 30 MTF chart below)

As my trade started at about midday Tokyo session, at 8:00 (6:00 GMT) on the 5 MTF chart a wedge is formed. My bias at this time is on the short side as the prices are moving below the Pivot Point.

On my scalp trade which I used the 1 MTF, I entered a short at 8:16 when EURJPY fall below the blue channel with all indicators pointing a downward moves. Exit at 78.6% retracement of swing low of 132.20 to swing high at 132.73.

The next entry is long when prices break the down sloping line at 9:00(7:00 GMT-European session started).

With the two entry I have made my daily profit target of 50 pips.

Trading EURJPY at midday Asian session

EURJPY was on the slide since European opening. The EURUSD was trading at narrow range with the Yen crosses slipping as Japan recorded an improved 3^rd Qtr GDP. EURJPY slipped from 134.30 to 133.14. EURJPY recovered to the 38.2% fibo retracement at early Asian session to 133.55. It made a swing low at 133.05 and the prices went sideway within a range of 20 pips. Upon penetrating the downtrend line (the red line) I made an entry for buy. My target is to the area of 61.8% retracement of swing high 133.55 to swing low of 133.05. Upon reaching the fibo 61.8%, prices formed a dark cloud cover candle and the Asian open price provides the resistance. Enter for short with target of 20-25 pips.

The unemployment effect lingers

EURJPY settled into range after absorbing the unemployment data storm yesterday. With the exception during the European/London session which saw EURJPY moving with a high volatility, the EURJPY trade in orderly fashion not going nowhere fast with no strong incentive to add a loaded risk position nor to liquidate existing one.

The low at midday US session to the opening high of Australian/Asian session set a fibo swing retracement level. Prices went sideway at below the 61.8% retracement but did not touch the 78.6% retracement. Given that the last price reaction only retrace 38.2% of yesterday swing high to low, I foresee that EURJPY is moving downward therefore my scalping trade will be a downward bias.

The EURJPY recovered what was lost

The Euros strengthened against the USD and JPY with EURJPY managed to recover during the Asian session what was lost the previous Friday . EURJPY was ranging between 50 pips during the European and New York sessions.

The short term is bearish with lower highs and lows since the close of New York session. With a quieter European and American session, the early session today will be more or less in the continuation of the previous mood. The 60 and 200 EMA in the 5 MTF are converging substantiating a side way move.

Recovery on the bad data of unemployment rate

The main economic news for last week was the NFP release and the unemployment rate on Friday. The news surprised the market for the downside moved that we saw the return of risk aversion which favour the JPY.

From the high of last to the low of last Friday, a 38.2% retracement acted as resistance to early Asian session. The Daily Pivot Point also pinpoint the early resistance level. Than EURJPY retreat to the 78.6% retracement at Tokyo open (00:00 GMT). This support level supported by the monthly pivot point and the daily midpoint between the pivot point and the S1, set for EURJPY on the upside move that started at low of 133.32 moved past the pivot point and approaching the R1 at 134.63.

The recovery of EURJPY in morning Asian session indicated the market had digested last week unfavourable economic news in US.

US unemployment rate at the highest in 26 years

Yen strengthened against the USD and EUR during the US session last Friday on risk aversion worst than expected non-farm payroll report from US. Job market contracted slightly more than expected by -190k in October, worse than consensus of -165K. unemployment rate which soared to 26 year high of 10.2% versus consensus of 9.9%.

After the painful employment figures in the US, the market will have more time to digest the news this week.

EUR/JPY recovered strongly during the middle of the week but retracement to 50% in the last two days showed that t the upside was limited below 135.97 resistance and thus retain the near term bearish outlook that fall from 138.47 is still in progress. Friday's fall and touching of 133.15 breaking minor support of 133.36, indicated a bias downward retesting 132.50 first. Break will bring fall resumption towards 131.72 next. However, note that a break of 135.72 resistance will argue that fall from 138.47 has completed and will turn outlook bullish for retesting this resistance first.

EURJPY after a bull run on the on friday

Similar to the opening session of last week, EURJPY experienced a big correction. EURJPY than found support at 2:10 (23:10 GMT). From the support level (reaction low) to the previous high, a fibo is drawn. At 78.6% retracement there is strong resistance. See the chart below.

From the resistance point, I enter the market at 3:26 with price at 138.09 after the first market reaction with signal from BB Macd and SBS. Stop loss is 138.19. Managed to liquidate the first half of my position with a profit of 20 pips and the balance at 30 pips profit.

EURJPY was trading at narrow range of 40 pips and bouncing around its pivot point during he Asian session.

My New Scalp System

I have not been trading regularly since early this year because I have other pressing matters.

All this while I have trying to put forward a trading system that is simple to use with few indicators being utilised. The simplify method will used the usual indicators I previously used. My target is to earn 50 pips during my trading session and my trading session will be less than 6 hours per day.

After reviewing the systems and indicators that I have used, I decided to use two basic indicators; BB Macd and Stealth buy & sell (SBS).

I used two time frame charts; 1 MTF and 5 MTF (sometimes 15 MTF)

The currency pair I prefers is EURJPY

Trading session: 00:00 GMT to 16:00 GMT ( Asian and European/UK session). Restricted my total trading session for 6 hours per day.

Profit objective: 50 pips per day

Entry procedure:

1. Check that there is no pending economic news.

2. If there is a news event and it occurs during my trading time, I avoids trading 30 minutes before and 30 minutes after the news event.

3. I refer the 5 MTF chart looking for Support and Resistance (S/R) level using fibo analysis, pivot points, round numbers, Bollinger Bands, 60 and 200 EMA, laguirre and Double CCI.

4. After the S/R level been determined, I wait for price reaction for trade entry.

5. Than the 1 MTF chart is refers using BBMacd and SBS for the entry.

6. Stop loss is at previous high/low with a minimum of 10 pips.

7. My profit target is set in two stages

A) First stage: take 20 pips profit and liquidate half (1/2) of my position.

B) Set the balance of my position with stop loss at entry price (breakeven) . After price reaction set stop loss with running stop of 10 pips.

Which way EURJPY?

During the Asian session the US dollar showed weakening strength against the Euro and Yen and consequently the EURJPY cross was caught in two minds whether to track higher on the back of a bid EUR or lower with a sinking USDJPY.

Normally, trading in EURJPY cross my time frame will be 1. the opening of Tokyo market at 23:00 GMT to two hours later and 2. 39 minutes before the European market open at 5:30 GMT to about closing of London Market at 20:00 GMT.

For today, my first trade was at about 8:35 on the 5MTF chart (or 5:35 GMT). The low at about 130.13 of EURJPY was supported by a confluence of fibo numbers. There was a bulish harami cross pattern. I entered at 137.20 when prices cross the high of the gravestone doji with CCI 34 cross the 34 ema and confirming a divergence.

At the bottom of the chart is the BB Squeeze indicator. The indicator utilizes the bollinger band, keltner channels, and momentum.

The indicators used was developed by John Carter at Tradethemarkets.com.

The dots at the bottom indicate whether or not the bollinger bands are in the keltner channels. If the bollinger band is inside the keltner, the the dot will be red. This is a quiet period. If the bollinger band is outside the keltner,l then the dot will be blue. This is a period of volatility. The bars are above or below the dots display the momentum.

Safe Haven

As expected, yesterday EURJPY high candle of 134.11 forming an evening star pattern indicated a reversal of strength.

EURJPY slide downward from London open to New York session close. The drop is similar to the slide in EURUSD indicating weakness in the EUR. USD and JPY strength coincide with retreating stock markets as forex investors shifting into “safe haven” currencies. It seem that share investors are nervous as September might be a terrible month for share prices after the run-up during the summer.

The fall in EURJPY carried all the way to the retracement at 138.2% and subsequently it went sideway during morning Asian session. The cross could see some retracement upward from the recent slide.

short at 61.8% retracement

EURJPY reversal began at late Asian session yesterday. The cross gain strength as EUR strengthened across all pairs.

The cross uptrend was supported by the red trend line and it managed to breach the 60 ema by mid day Asian session (refer to the 1 HrTF chart). The cross is expected to experience a resistance at 61.8% retracement and the 200 ema. I look for a short entry at about 7:00 GMT or at London open.

Entered a short position at 7:19 GMT with indies showing bearish sign. Entered at 133.95. With my target price of 30 pips, my exit will be at 133.65. With the cross moved almost flat, I exited at 133.78 when the indies indicated a reversal.

I waited for any short position again since I believed the cross has showed weakness especially looking at longer time frame.

Entered a short position at 133.85 (8:04 GMT) with target at 133.55. Managed to achieve the target 25 minutes later. Total gain is 47 pips.

Yen Firming on China Shares slide

The JPY crosses has strengthened during since midday New York session.

Early Asian session, JPY strengthened further as Chinese stocks have been hit again. Yesterday’s cautious rhetoric from Chinese Premier Wen Jiabao seems to have hit a nerve there, the official warning “We must clearly see that the foundations of the economy are not stable, not solidified and not balanced. We cannot be blindly optimistic.”

China’s Construction Bank has come out and said excess cash in the banking system has led to asset bubbles. This has underscored concerns that lenders will rein in credit, which is helping undermine market confidence.

Meanwhile a senior government economist Lu Zhongyuan, vice head of the Development Research Centre, has told an economic forum today, that Chinese investors are over-reacting to talk of monetary policy fine-tuning. He feels the recent slide in stocks will be short-lived.

The heavy selling in EURJPY was arrested when the cross touched its weekly pivot point and on 1 HrTF chart, an morning doji star was formed indicating a reversal of trend.

On my 1 min trade, I entered at 6:13 GMT with all indies showed a buy signal. Entered at 134.10 with target price at 134.40 for 30 pips objective. Target reached at 6:41 GMT.

The Yen and the Stock Market

Chart 1

Chart 2

The Yen continued to registered an upbeat mood as wave of risk aversion swept the currency market following the official start of the bear market in Chinese equities, with a 20% decline since Shanghai index peaked in early August (refer to the chart of Shanghai Stock Exchange (SSE) Index -Chart 1).

The Yen longs pushed the EURJPY lower to 132.16 during early New York session yesterday. Refer to chart 2. A bullish engulfing candlestick managed to turn the pair in the opposite direction.

The pair rested at 61.8% retracement for much of late New York session and early Asian session. The Yen weakness was partly due to Asian markets going through gains, as higher commodity prices helped Wall Street to turn positive on yesterday after an erratic opening.

Yen affected by drop in Chinese shares

Japanese Yen shrugged off recent weakness which saw it strengthened with EURJPY pair fall from 137.80 to 135.50 and USDJPY pair slipped from 96.50 to 95.00.

Today, Morning Asian session for EURJPY mirror the previous day movement which saw the pair moved below the opening session and recovered toward lunch time.

When EURJPY touched 135.50, it is at 61.8% retracement from the swing low at 7:00 GMT 12 August to swing high at 12:00 GMT 13 August.

On 1 MTF chart, the 61.8% retracement occurred at 3:41 GMT (the white vertical line). At this level it was also the previous day low( a major support level). I entered 3 minutes later at 135.65 with my target at 135.95 (30 pips target). managed to exit about two hours later.

Early trade indicated that there was some demand for Yen crosses heading into the Tokyo Fix but that demand were quickly abated, with exporters selling USDJPY, putting pressure on yen crosses towards the end of Asian session. The Shanghai Composite was down by 2% and added to the selling pressure of Yen crosses.

Waiting for FOMC

EURJPY cross was under heavy pressure since early Asian opening as the Yen and the dollar strengthened ahead of today FOMC announcement.

There is a general feeling that the FED will tightened its monetary policies earlier than anticipated.

The yen fall from its high in early Asian session at 135.98 to its low during early London session at 134.07.

It than reversed the southward direction and I waited for a pullback to enter. Pullback occurred at 9:00 GMT and at 9:10 GMT I enter with all indicators showing “buy” signal”. Refer to the 1 MTF chart below. My entry was at 134.40 with target at least 30 pips (134.70). EURJPY touched the 200 ema (the red line) at 134.73 and I exited.

End of bullish channel

EURJPY is expected to be bearish as yesterday, the close is below the pivot point and the previous day close.

The pair rally from yesterday early morning European session and ended 15 minutes after Toyo open today with an evening star candle.

The pair broke the upward channel line and the Tokyo opening price at 0:45 GMT and I took a short position.

On the 1 MTF chart,I took a short at 0:41 GMT when the red lag fall below 85 and the both CCI cross the 30 EMA and the zero line. BB macd fall below the zero line with a negative cross.

Resistance at 100% Fibo Expansion

Yesterday EURJPY rally after US sesion opened was stalled at 137.45 of 100% Fibo Expansion and retreat.

The pair found support with 60 EMA and consolidate with a triangle. At Early Australian session, the pait break through the lower traingle channel and by 24:00 GMT a reversal candle patternwas formed with a doji and a morning star.

I prepared my entry when price moved aboved the pivot point and the opening Asian price.

The Yen ..........weakness in late May

Since May 18, EURJPY was on the uptrend with pair have gained more than 1,000 pips.

The April 6 high of 137.4 and the 100% fibo expansion from swing low of April 28 to swing high at May 11 created the immediate resistance.

Yesterday the pair gyrating between 134.85 and 134.0 during the Asian and European session before exploding upward to R3 during the US session.

Today Asian session the pair moved sideway at the pivot point and the opening price.

The pair is expected to move downward if it managed to breach the pivot point at 134.94 with support at S1(134.70). If the pair managed to overcome the opening price which have been tested twice, the resistance is at 137.20.

My scalp entry is at 7:54 or 4:54 GMT, when the pair tested the opening price for the second time. If failed to breached it with CCI cross over the 30 SMA from above and the B&S signal is red and the sidewinder is green, I made an entry for sell. The BB Macd also showed a negative cross.

My first target is at 76.3 spud fibo (136.43) and the second target at pivot point and the round number at 136.00.

Reverse Head and Shoulders

The EURJPY formed a reverse head and shoulder pattern during the Asian session yesterday.

After breaching the neckline at 128, the pair shot upward in early European  session with the moved ended up to the end of yesterday session.

The strong moved is supported by the bullish indicators of lag, CCI and BB Macd.

Price consolidate during toay Asian sesssion and capped bylast Friday high of 131.13.

I am expecting the pair to test the next resistance level at 132.49

For my scalp trade, I noticed that the pair moved below the asian opening price and the 24:00 GMT price. It than break trough the 24:00 GMT price and went sideway. At 6:00 GMT it tested the 24:00 GMT price level.

Looking at my 1 MTF chart, at 6:19 GMTwas a perfect entry for long with all indicators pointing for a buy. Entered at 130.60 with my firts target at 130.90.

With a strong moved, I derefered my exit on BB Macd. At 131.26 BB Macd showed signed of weakness with CCI21 crossed over the 30 SMA from above. Exited at this level for a profit of 66 pips.

EURUSD at European Open

During Asian session The Yen managed to eke out some gains against other currencies and the EURUSD moved within the range of 1.2950 and 1.2910. The Yen got a boost from a better than expected March trade report.

One hour before European open, the EURUSD went toppish with a bearish hanging man candle. There were a lot of rumours of buying orders at 1.290 level. The EURUSD weakness pull down USDJPY and EURJPY along.

At European open at 7:00 GMT or  9:00 GMT on the above chart, I started my  scalp trade.

EURJPY encountered a S/R level at round number 127.50 and the 24:00 GMT line at 127.45.

Open a sell entry at 9:21 with blue lag moved down below 85, CCI 21 cross the 30 sma with a negative BB Macd. My first target is at 200 ema but seeing CCI 89cross the zero line and blue lag and red lag went flat below 15 I moved my target at another round number at 127.00.

The pair keep falling down as EURUSD is moving toward the expected buy area of 1.290. I moved my target to 126.50 with CCI reach the extreme and a divergence of CCI and BB Macd.

EURJPY

From a website Forex Crunch, the writer list 5 currency pairs which are more predictable and least predictable.

 

The least predictable are:

1.          USD/JPY

2.          USD/CAD

3.          GBP/JPY

4.          EUR/CHF

5.          GBP/AUD

And the more predictable are:

1.          AUD/USD

2.          EUR/GBP

3.          NZD/USD

4.          EUR/USD

5.          USD/CHF

 The least predictable pairs are hard to trade. They make wild swings, false breaks, or they make drawing trend lines on them quite impossible and have  graphs that are very unhealthy. They don’t play by the rules of technical analysis.

 The more predictable currency pairs are currency pairs that “play by the rules” of technical analysis. For example, if there’s a distinct resistance line or support line, than the pair will usually bounce when getting to close. Or, if this pair crosses the line, it does it “big time”, and makes a big move.

 From www.mataf.net, I found out that for the last one  hour USDJPY was highly correlated with EURUSD,EURJPY and GBPJPY and on daily basis it was highly correlated with EURJPY and GBPJPY.

 The daily volatility in pips for the four currency pairs mentioned above is as follows:

 1. EURUSD  - 166.1 pips

 2. USDJPY-118.30 pips

 3. EURJPY-236.8 pips

 4. GBPJPY-272.30 pips.

  Based on the above information, I decided to drop my scalp trade on USDJPY and replaced by EURJPY since the pair has a high volatility and moved similarly as USDJPY and not the least predictable pair. 

 

BB Macd

BB Macd is a derivative of MACD and Bollinger Band (BB). Technically it is a MACD fitted with a band calculated similar as BB. The basic structure of  BB Macd is similar to the normal/traditional MACD indicator. 

The green dot of BB Macd signify  that the current value of  MACD is higher than the previous period, and vice versa which is shown by the red dot that showed the current value of MACD is lower than the previous period. 

The different is that BB Macd does not have the signal line but it has  two bands that lurking around the Macd value. 

This indicator is quite recent where more practices is required  to become proficient. 

From the information I have read, some of the rules or guidelines in interpreting the BB Macd  are; 

1. In an uptrend with green dots moving upward when a red dot appeared and move below the top band it is similar to the downward cross (negative cross) for traditional Macd indicator i.e. Macd  bar falls below the signal line, a bearish sign. Conversely, in a downtrend with red dots on the downward move when a green dot appear and crossover the bottom band it is an upward cross or positive cross for traditional Macd indicator i.e. Macd is above the signal line. 

2. When the green dots cross the upper band, the trend is up and vice versa when the red dots cross the lower band. 

3. If the dots is slowing and the bands are coming together, trend  is weakening.

   -In a strong move especially after consolidation, the dots are moving rapidly with little pullback.

-The distance between the bands can identify the strength of the trend. The larger the gap between the bands, the more momentum is the move. 

4. If the MACD dots move outside the bands, the market has lot of momentum. 

5. At key area such S&R, BB Macd showed a strong reaction. On the chart , the blue triangle is an area where there is a resistance level of previous high and round number 99.0. The dots cross from the top of the band to the below the opposite band. 

6.  A zero line rejection occurs when the Macd BB touch the zero line and bounce, prices is expected to act similarly. Refer to red arrow  at blue rectangle and red arrow at the BB Macd. 

7. Divergence in BB Macd is treated in similarly as in traditional Macd.   

The favourable news that have been factored

Toward the closing of Asian Session, USDJPY found its bottom at 98.15 and posted a reversal piercing candle. By the time London open, USDJPY had recovered its losses  suffered during the Asian session. Prices then moved sideways between a triangle for the next two hours. At  10:40 GMT, the top of the triangle was penetrated but I waited to make a buy entry at 11:00 GMT when prices break the previous top. 

As there will be lots of economic indicators coming during early US sesion, with TIC Long-Term Purchases and Core CPI being at the center I stopped trading 15 minutes before the reports were to be announced. 

Overall, the reports were positive but USDJPY  was  not responsive. It went toppish with a doji evening star at 13:05 GMT. The Euro make a reversal upward about 10 minutes later. This clearly indicated the reports have been factored about 3 hours earlier. 

Early morning during today Asian session, market was quite and traders expected a bit of volatility in USDJPY. Nikkei is expected to rise as Wall Street recorded a late surge of buying interest accompanied by a spike in trading volume. 

Before the Asian open and 24:00 GMT, USDJPY  was moving between prices channel of  99.35 and 99.22. 

My first entry was a buy at 3:06 (0:06 GMT) with Double CCI crossed over the zero line, MACD positive cross and moving over the zero line. After the entry, USDJPY moved pass the 200 ema and the red lag moved over the 15 level. 

At this point the resistance level is at round number 99.50 and the previous high at 99.49. Exited the position at 99.45 for a 15 pips profit. 

My second entry is a short after the rejection of CCI 21 from the 30 sma and negative cross of MACD at 3:33. The blue lag is approaching the 85 level from above. Exited the position when prices touched the 60 ema and MACD went flat at the zero line. 3 pips profit. 

The third entry is a buy at 3:50 with a positive MACD,CCI 21 cross the 30 sma and CCI89 bounced of the 30 sma with the blue lag moving above 15. Target at round number 99.50. Gained 8 pips. 

The final entry is at 4:03 with blue lag cross 85, CCI21 cross the 30 sma and a negative cross of MACD. Target at 200 ema for 8 pips.

Poor Retail Sales Report with USDJPY moved passed 99.00

Retail sales, which have taken a beating during the recession, is expected to post a small gain in March.

Wall Street analysts surveyed by Thomson Reuters expect retail sales increased 0.3 percent last month after dipping 0.1 percent in February. Economists expect a slight bump in auto sales in March contributed to the overall rebound.

According to retailers' reports, sales showed some encouraging signs of stabilizing last month. Consumer spending is closely watched by economists because it accounts for about 70 percent of total economic activity.

Therefore, retails sales report at 12:30 GMTwill set the tone in the forex and stock market.

The retail sales report came uo with a surprise, a tumbled of 1.1 % instead of an improvement of 0.3%.

After the announcement USDJPY fall from 99.95 to 99.15 within 30 minutes. There was a rebound to 38.2% retracement i.e at 99.50. I took my short sales at that level i.e at 16:23 and 35 minutes later I exited the position and enter a long position.

This morning, I expected  risk aversion a main theme in the forex market with Yen cross strengthening.

USDJPY S/R Level:

1. 24:00 GMT- round number 99.00.

2. Spud fibo 61.8%-99.14 and 50%-99.06

3. Daily pivot-99.03

USDJPY did recovered during the early morning Australian/Asian session but it was more like a dead cat bounce. It moved passed the 99.00, the daily pivot and the spud fibo 50% level. On the 5 MTF chart at 3:20 a bearish evening star is formed.

Made my short entry at 3:24 with CCI 21 crossing 30 sma, The blue lag moving below 85 and MACD with negative cross.

My first target is at 200 ema (the red line) but with Nikkei sliding under negative territory and USDJPY cross the 200 ema, than pullback but bounce of the 200 ema my next target is the low of yesterday at 98.73 or the S1 level-98,67

 

 

Testing the 100

"The market is cheering, not so much that the banks are on the mend, but that they are not going to die," - Les Satlow, portfolio manager of Cabot Money Management.

Overnite during US session, improved risk appetite  put pressured on the Dollar and Yen.

U.S. stocks ended mixed optimism about bank earnings offset by falling oil prices, a profit warning by Boeing Co and worries about GM; Dow Jones industrial average .DJI ends down

25.57 points, or 0.32 percent, to 8,057.81. Nasdaq Composite Index inches up just 0.77 point to 1,653.31, while S&P 500 adds 2.16 points, or 0.25 percent, to 858.73.

Goldman Sachs posts higher-than-expected first-quarter earnings after the close while it was reported in The New York Times that U.S. Treasury tells General Motors to prepare for

bankruptcy filing by June 1.

Nikkei future at SGX open higher but it is expected that Nikkei to moved lower as it is at overbought position.

From the opening asian session at 23:00 GMT, USDJPY moved upward passed the daily pivot.

I am expecting by 24:00 GMT (Tokyo stock market open), USDJPY will meet resistance.

S/R Level:

1. Previous day 24:00 GMT line-100.42

2. Weekly pivot-100.34

3. Spud fibo 61.8% retracement-100.38

My entry:

1. Sell at 3:23 (0:25 GMT)-MACD divergence, Blue lag cross 85, CCI 21 cross 30 sma. 

Target price: The red lag moving below 85, with expectation support at 200 ema and daily pivot at 10.21

2. Sell at 3:54 with blue lag moving below 85 and extreme hook of CCI 21.

Target price at spud fibo 38.2%-100.16 and 23.6%-100.95

With two trades I achieved my target of 30 pips per session.

 

My Entry Filter: The Sidewinder

The entry filter is kind of traffic light that is used during entry for long and short.

Green is a "Go"

Yellow  it's risky

Red is "Stay out"

The filter  help me to stay out of choppy  zones and sideway market trend.

Look at the chart.

3:23 buy signal and 3:28 are ignored because the sidewinder is red.

3:33 buy signal has a yellow sidewinder which is risky. We could entered the position but expected a small profit.

3:41 sell signal is ignored due to red sidewinder while 3:48 signal is a bit risky.

Quantitative Easing by ECB?

Forex market which has been on continuation of Risk Appetite as stock market was geared toward recovery, saw a week of consolidation and ranged trading due to holiday shortened week. Stocks was fueled by optimism after Wells Fargo offered a Q1 earnings forecast that was double the consensus estimates and a revenue number $1B higher than expected. This week all eyes will turn to the earning reports of Golman Sachs on Tuesday, JP Morgan on Thursday and Citigroup on Thursday.

The economic calendar is jam packed with US data including PPI, CPI , retail sales, business inventories, TIC capital flow, NAHB housing market index and new residential construction, Philly Fed survey and U of Michigan consumer sentiment. Other data include Eurozone HICP final, industrial orders, trade balance, Japan Domestic CGPI, industrial production and Tertiary industry index consumer confidence.

Euro  was broadly lower against the majors as anticipation of further rate cuts and the start of quantitative easing by ECB last week.

The Yen ended the week at a modest gain against USD and Euro despite of risk appetite sentiment and gains in the Equity Market. 

Early in Asian session today, USDJPY was listless moving sideways within 5 pips.

Nikkei was expected to be lower today.

USDJPY S&R level

1. 100.35-opening price asian session

2. Spud fibo; 38.2%-100.40, 23.6%-100.33, Previous day low-100.21

3. 100.34- Weekly pivot point

4. 100.20- daily pivot point. 

At 2:59, the both CCI is at extreme and possibility of a CCI 29 hook. At 3:00 price gap up with a bearish black candle and one bar later a doji was formed. Possibility of an evening star follow by doji star if price in the next candle has a long black candle body.

Enter short at 3:01 closing price. Confirmed prices downward pressure when it breached the 100.35/34, the blue lag cross 85, CCI 29 negative cross, MACD with red dots moving pass the lower band and zero level. Target at 100.20 (daily pivot).

Exit at 3:15 and reversed with a buy. Double CCI at extreme with blue lag inching uoward and divergence in RSI. Exit at Asian open level and 200 ema (3:19). Managed to gain 33 pips for the two trades