The market was looking for a reason to disregard its risk aversion mood and found in a better than expected US home sales, Barclay Bank positive earning forecast with no further fresh capital injection and a major takeover in the drug industry (Pfizer over Wyeth) yesterday.
The risk aversion index VIX has fallen for four days in a row to 46, but need to go below 40 before sentiment turnover can be inferred.
Major currencies strengthened against the US dollar and Japanese yen. The USDJPY was bullish during Asian session and carried all the way to European session. As European session end and lunch time in US, the USDJPY weakened by falling from the day high at 89.67 to the low of 88.84 at 20.00 GMT. The cross went sideway at 23.6% retracement from the previous swing high to low…between 89.00-88.90 level.
Today open, the USDJPY fall below 89.00 level and the uptrend line ( red line), with yesterday daily pivot point and the lower Bollinger band become a support level. Than it reversed upward creating a bear trap.
Subsequent moved upward were impressive penetrating the daily and weekly pivot points, and the three moving averages. At
I entered long at 2:13 GMT and closed at 89.40. Almost near to the 76.4% retracement. At 2:46 GMT the 6 ema cross 12 ema from above indicated a short position, with 76.4% retracement almost within reach, I decided to short USDJPY. By 2:57 GMT both ema's fall below the 50 sma confirming the reversal to short term downtrend. The target will be the 200 EMA.
