Bad US GDP figures

Today is the last trading day of the month and traders are squaring back their profits and positioning themselves for next week.  USDJPY actions can be separated into two parts; 1) the Asian session up to London open and 2) London open up to current i.e 20:00 GMT. During the first part USDJPY was down trending under the trend line AB. The cross fall from 90.14 to 89.17. At 8:30 GMT a piercing candle pattern was form signifying a reversal to uptrend. The uptrend moved within the C1C2 –D1D2 channel. I expected this uptrend will touched above the 90.00 and forming a nice and proper  “V” shaped pattern for the day. 

Key economic releases in US continue to show that the current recession will is at least as bad as the recession of the early 1980s. GDP showed a smaller than expected declines but nonetheless the largest contraction since the recession of the early 1980s. The Core PCE came in weaker than expected but showed slight growth. The Chicago PMI dropped below the 34.9 expectation to 33.3, just below the lowest reading reached in 1999 following the collapse of the dotcom bubble. Consumer Confidence also proved weaker than expected at 61.2, economists had expected 61.9. The reading is well off the 55.3 low reached in September but is a stark reminder that conditions remain negative and further downside will continue well through much of 2009.

No major reaction has been observed in currency markets following the releases although US stock  Markets are visibly down with the Dow 30 showing a greater than 1% decline.

In my 1 min TF trade, I try to took advantage in the uptrend channel of USDJPY. When cross reached the upper channel, I enter a short position and a long position when the cross touched the lower channel. The first entry is when the cross touched the upper channel at 12:00 GMT. At this juncture, the cross is above the BB and 38.2% fibo retracement. RSI is at overbought level with the blue lag is stuck above 80 level and the red lag is approaching the 80 level. A hanging man candles is formed after the previous candle touched the top of the channel. I took a short position with the target at 50% retracement-89.56.  or lower at  S1-89.44.

Price do touched S1 and formed a doji and later a bullish candle is formed to confirm the previous candle is a doji star, i.e morning star. With the reversal, a proper 4 point channel is now clearly define and trade could be enter at the top or bottom of the channel.