Early April Fool for USDJPY

Yesterday main factor in USDJPY was the end of Japanese financial year which manage to pushed the cross downward to about 96.00 from  98.30. USDJPY was able to recover 30 minutes after London opened and carried the cross over to 97.50 at noon New York time. USDJPY closed at about 50% retracement of the day high and Low. 

This morning, the early affecting events will be the Nikkei moves and Tokyo trade data. 

Last night, Wall Street was battered with the Dow fall by 3.3% and S&P 500 by 3.5%  due to concerns over outlook of U.S. automakers. 

The trade data reflected negative sentiment; 

Japans February Jobless rate came in at 4.4%, a touch worse than the expected forecast of 4.3%, thus rising to a 3 year high. The jobs to applicant ratio was 0.59, a 6 year low.

 

March Manufacturing PMI rises to 33.8  from 31.6 in Feb and the Manufacturing Output Index rises to 25.9 from 22.7 in Feb. This is the 13th straight month of contraction in manufacturing activity as the Index stays well below the 50 mark. 

Japan February Household spending was up 0.3% month on month. Year on Year it came in at -3.5%. Forecast was for -4.6%. 

Traders was expecting a poor performance for Nikkei with USDJPY to behave in similar fashion but  Nikkei was up 1.68% in early trade at 8,374.57, reversing opening declines, and after sinking 4.5% Monday. The financial year end bearish yen seem to be abated. 

My 1 MTF scalp trade as per chart below. Enter my long position at 23:53 GMT (the first aqua color triangle) on buy signal of blue lag, Double CCI, B&S, LCD and MACD. Existed at 0:12 GMT for  27 pips profit. Second entry at 0:23 GMT with a profit target of 10 pips. Exited  20 minutes later. total profit for the Asian session is 37 pips. 

The end of Japanese Financial year.

The main story during the Asian and European session for USDJPY was end-of-Japanese-financial-year flows, and the Tokyo and London Fix.  

During the Asian session, USDJPY fall   111 pips from 98.86 to 97.69, A correction carried USDJPY to the 50% retracement level. A bearish harami ended the correction and pushed the cross downward to a  fibo expansion of FE100.00 at  11:45 GMT.( see the 15 MTF chart of USDJPY above). A strong support (the red line) also existed at this level. A possibility of reversal to upside during US session.  

.At around 11:30 GMT or about 30 minutes before US session open, I scanned  the 1 min USDJPY for scalp trade. (refer to 1 MTF chart below). 

At 11:52 USDJPY touched -23.6% spud fibo and the next candle was a harami. My entry was at 11:59  after the blue lag crossed the 15 level, MACD crossed upward and light blue color line  of Double CCI cross from below the black color line of 30 period SMA (a positive cross). Two minutes later there is a buy signal for B&S. The next B&S signal was red and was ignored since the other indicators still in buy mode. Exited my position when the prices came to a resistance level of 60 period ema with blue lag started to move downward and the negative cross in Double CCI.  

The second entry (the second aqua color triangle) was triggered by the buy signal of B&S, LCD and positive cross of Double CCI. Closed my entry at the 200 period ema (red color). Earned 35 pips for the two trades.

Tokyo Fix

Early on Wednesday March 25th US session, in a blink of an eye the U.S. dollar has collapsed against the Euro, Japanese Yen and other major currencies. The trigger was comments from Tim Geithner who said that the U.S. is "quite open" to China's suggestion of moving towards a Special Drawing Right (SDR) linked currency system. If the world adopts the SDR, which was created by the IMF as an international reserve asset, it would mean that countries around the world would need to hold less U.S. dollars. But losses were pared  after the U.S. treasury secretary reiterated his faith in the dollar as world reserve currency. White House uses same language; dollar to remain reserve currency for long, long time and Volcker dismisses Chinese proposal out of hand, calls it impractical; blames China for accumulating too many reserves, contributing to the imbalances.  

The Chinese government  always have reasons for what they say and do. Last week they were questioning the ability of the US to repay it’s debts and this week they have been calling for a new global currency to replace the USD as the world’s main reserve currency plus they called a bottom in the Chinese economy (read “white knight” to the rescue of the worlds’ economies!).

 

Yesterday was a bad day for Yen with Euros and the Dollars appreciating all the way beginning from the Asian session. Bullish global stock market was the catalyst as traders become less risk aversion.

 

 For today, there will be two big events in the FX market, the Tokyo fix and the London fix, and the end of the Japanese financial year. Rumours doing the rounds yesterday were of “massive” sell interest in USD/JPY. 

The Tokyo fix is at 09.50 local Japanese time, which is currently 00:50 GMT and the London fix is at 16:00 local time which is also 16:00 GMT. Generally the Japanese and London Fixes are particularly busy on these days

The Fix is the price in which Banks (& clients) book & balance order flows on the (last) contract price. So even though the rate may change during the day the customer gets the rate at the time of the fix. Importers generally settle their accounts on the 5th, 10th, 15th, etc, of the month before and up until the Tokyo fix at 0:50 GMT. Sometimes, if there is an "excess" dollar demand USDJPY will continue to climb slightly after the fix. Dollar Bulls will also use this as a staging for extending a rally. Dollar Bears (Yen Bulls) will use this to establish better shorts.

Technically, the USDJPY has formed a double top with a tweezer candle and a neckline at around 98.70. The neckline is almost level with the weekly R1 (resistance). Generally, the Asian session overturned the  US session. In this case a bullish USDJPY overnite will be a bearish in early Asian session.

The market open at the neckline and below the weekly R1. The B&S and LCD indicated a sell signal (refer to the 1 MTF USDJPY chart below). I took a short position at the aqua color triangle and met my 30 pips objective 12 minutes later.

Bad export figures for Japan

Price action during US session:

EURUSD      -1.14%

EURJPY         -0.83%

USDJPY          -0.43%

 

Economic events During US session

1.  Chinese white paper on a new global reserve currency with proposal of ditching the US Dollar and  the tacit IMF support for at least discussing the idea at the upcoming G-20

2. US equities give back partial gains, falls 2.1% with bulk of losses coming late.  

The market was  unable to take advantage of the bearish dollar news with markets seems to take profit  from the recent gains of prices  uptrend. Euros was pressured  by the US dollar and the Yen, but USDJPY was sluggish and  quite volatile.

For  early morning Asian session  trade, Japan  merchandise trade balance report and the Nikkei sentiment will impose a bearing for USDJPY.

USD JPY opened the day (Australian opened) above the daily pivot point and moved up to  24:00 GMT. Prices met a resistance level of 76.4% retracement  with a reversal  engulfing candle. The reversal is expected to move prices below the pivot point of 97.78 since trade data was reported below expectation which is bad for the Nikkie but not the Yen. Nikkei opened higher but after the trade data report it went sliding.  

Japan's exports dived a record 49.4 percent in February from a year earlier, as global demand for Japanese goods such as cars and electronics evaporates amid a deepening financial crisis.

It was the fifth straight month of annual drops in exports, following the previous record fall of 45.7 percent in January and larger than the median forecasts from economists for a 47.1 percent drop. 

Flat USDJPY

USDJPY was moving upward since last Friday within the uptrend channel (the brown color channel line). At 7:00 GMT, (point A) USDJPY was a top of the channel and met resistance of the downtrend line formed since March 5. Point A is also at the 61.8% fibo expansion of swing low (i) to swing high (ii). From point A with a reversal candle of dark cloud cover, USDJPY  moved sideway from the opening of European session up to noon in US session. 

Better-than-expected European PMI data are not helping the euro make new gains against the U.S. dollar and Yen on Tuesday during the European and US session. The European stock markets was higher at the  opening session  as Asian stock market closed in the positive territory but towards the closing European stocks were lower than their opening prices. In US, stock market was at negative territory during the morning session but recovered at lunch time. 

The poor sentiment of stock market was reflected in the weakness of Euros against the US Dollar and the Yen. During the Euros weakness, USDJPY has no bearing and progress sideway. The consolidating USDJPY continued during early US session despite weakness in US stock market. From the opening of European session up to the morning US session, USDJPY was bouncing between 98.00 to 98.30.

USDJPY moving along with the Stock Market

Asian shares were higher at the opening session, buoyed by a rally on Wall Street amid plans to detoxify banks of their sour loans, with markets led by continued strength in the financial sector. Yesterday, the Dow Jones Industrial Average surged 6.8% with the financial sector of the S&P 500 gained 18%.

Still, sizable gains by many regional bourses Monday seemed to have pre-empted the U.S. move..

Japan's Nikkei 225 was up 2.1% after rising 3.4% Monday

A surging Nikkei  drag USDJPY along.

My 1 MTF scalp trade as per above chart, started at 24:00 GMT when Nikkei started its day.  I entered long with two positions.  

The first position(the first aqua color triangle at 0:13 GMT) profit of 23 pips. Prices bounced off the 97.00 level.

The second  position i.e at 0:39 GMT after prices settled at 97.25 with my target at 97.50. I take profit at at 97.46. 

The bad news in Japan and the good news IN US.

During the Asian session, Asian currencies rose, led by the Indonesian rupiah and South Korean won, as gains in regional equities boosted speculation investor demand in reviving for emerging-market assets.

Eight of the 10 most-active currencies in Asia outside Japan strengthened against the dollar as the MSCI Asia Pacific Index of regional stocks climbed 4 percent.

However, the Yen went against the trend of Asian currencies as it is affected by poor economic news emitting early in  the session. Firstly, the news that Japanese business sentiment is falling to a record low. The business sentiment index for corporations with capital of 1 billion yen or more came in with a -51.3 read for the first quarter of this year, way below the -35.7 seen in the final quarter of 2008. The latest data is a new record low and the fifth consecutive quarter the index has been in negative territory. 

The second quarter outlook index for large companies came in a -24.8 and -7 for the third quarter.  The survey is widely seen as a precursor of what we’re likely to see in the Tankan business sentiment survey that is due on April 1. Given the evidence above, it is likely to make for very grim reading. 

In other news from Japan, land prices dropped for the first time in three years in 2008, official data showed, reflecting the impact of financial crisis on Japan's real estate market.  

The USDJPY opened gap down and find support at 38.2% retracement at 22:00 GMT. A reversal hammer candle carried the prices up to 96.50 area at 50% fibo expansion with blue lag moving above 15 and MACD with upside cross. The top that occurred at 2:30 GMT was followed by bearish engulfing candles. 

USDJPY from the new high, retraced back 38.2% by 7:30 GMT. With a reversal morning star candle, USDJPY moved upward as the dollar strengthened during the European and London session. Prices managed to overcome the day’s high and consolidated during early morning US session. 

The home sales data released at 14:00 GMT that had been expected to dip further was a surprised to the upside with affordability improving. Sales in February rose 5.1% while prices versus a year ago fell 15%. Mortgage rates are a good deal lower as well. Equities are responding favorably to the news and risk aversion is lessening, helping JPY crosses. This housing data comes as Timothy Geithener unfolds the Toxic Assets plan. 

The bad news in Japan and the good news in US managed to push USDJPY from a low at around 95.50 in early Asian session to 97.70 during early US session.

USDJPY going down to 92.00?

The dominant themes since the Federal Reserve's surprise announcement to implement quantitative easing on Wednesday have been U.S. dollar weakness and commodity strength, but on Friday those positions are being scaled back. 

In just two days following the announcement, the dollar had fallen 5 percent versus the euro, 3 percent against the pound and 4 percent versus the yen. Oil prices, meanwhile, soared 7 percent above $51 a barrel to the highest level this year. 

The dollar was able to recover lost ground on Friday; but the rebound was more a relief rally - with shorts squaring positions - than a genuine recovery in sentiment. A look to the Dollar Index reveals the true state of the world’s most actively traded currency. Friday’s positive close was the first in nine sessions – marking an unconvincing end to the dollar’s worst trend since February of 2008. 

USDJPY technically has now reached its measured move objective off of the head and shoulder top by 99.67, and after slightly exceeding the previous 2009 high/major double bottom neckline by 94.62 to 93.55, should finally find some support. There is a confluence of support by Thursday’s low in the form of the previous double bottom neckline, the 50% fib retrace off of the 87.15-99.70 move and the 50 day ema. 

On Friday, USDJPY  managed to close above 38.2% retracement with COG and BB at  oversold position,  but  the blue lag still has space to move downward that might pull prices down or  consolidating. 

If prices fall below 50% retracement,  the next support will be 61.8% at 92.00/91.90. If price do go to this level, the red lag will have a possibility of going under 85 level which caused a bearish tone.  Falling below 92.00 level also breached the 23.8% retarecement of swing high at  August 2008 to the swing low of the double bottom . 

On the other hand,  USD/JPY would rise further in April with the  100 level could be seen in the mid term.

Nikkei buck the trend in Asia.

Uncle Ben plan for quantitative easing monetary policy was warmly welcome b y most Asian Bourses which saw Asian stocks  move for a five-week high early in the morning, as bank shares helped extend a recent rally, and on broader investor optimism that a stronger U.S. economy will help the continent's export-dependent economies.

The effect however has a negative connotation for the Nikkei. It open high but five minutes later Nikkei started sliding downward. As previous mentioned in my postings that Nikkei has a positive correlation with USDJPY early in the morning, USDJPY went to the top at 0:05GMT after a double bottom during late US session. The top was restricted by 127% fibo extension and 100 fibo expansion with a overbought position as indicated by COG upper curve of orange color(refer to the 5 MTF chart above). At 9.20 am (Tokyo time) the Nikkei has gone to the red territory and carried USDJPY down. My earlier analysis of bullish Nikkei is negated and that goes along with the bullish view of USDJPUY.

The main worry for Nikkei was a strong Yen is affecting major Japanese companies as their earnings depend on exports. 

Uncle Ben's Quantitative monetary easing policy

With interest rate cuts no longer an option, Uncle Ben launch his Quantitative monetary easing policy  by using money. Uncle Ben went shopping by his massive  plan to buy up mortgage-backed securities, agency debt, and Treasuries to boost the economy and the markets.  

Quantitative monetary easing policy carries out monetary easing by using money supply rather than interest rates as its main tool. The benefit of this policy is that more funds can be supplied, even after official rates fall to zero, thereby expanding monetary easing further.  

Any country central bank buying its own country's securities raises the risk that it needs to print money to finance debt, leading to higher inflation. However, the Fed held the view that currently the deflation was a risk to the US economy.  

Uncle Ben action caused the dollar traded near the lowest in two months against the euro. As dollar weaken against the majors, it weaken more against the Yen. By 18:00 GMT the USDJPY  dived to its 261.8 fibo expansion. It managed to stabilize but at US closing it tested the low again. For the Asian session I am expecting USDJPY to inched slowly upward especially early on with a bullish tone for Nikkei. There is no major economic data except for BOJ monthly report in the morning.

 

USDJPY going down to 98.00

From a swing low at point B, USDJPY retraced up to 76.4% with a higher high and low that culminated with a inverted hammer at 9:00 GMT. At that level, prices met with the resistance of downtrend line. The prices reversed down and bounced off the daily pivot and forming a  big triangle.  At US open (12:00 GMT), USDJPY  is at oversold position since prices are  at upper level of  COG and MACD is negative. If prices broke the lower channel of the triangle and the daily pivot at 98.55 I expected it to break down to 98.20 and than 98.00.   

Nikkei and USDJPY fall

The US dollar generally ended Tuesday down against the majors, despite US economic news was generally positive, as data showed that both housing starts and building permits surged in February to 583K and 547K, respectively. Lower risk aversion and Chinese sales of US Dollar  are two factors weighing on the greenback.

USDJPY has been edging downward and reached bottom at 19:00 GMT. Prices reversed with a engulfing candle at COG orange curve. It went to a top at 23:45 GMT candle at 76.4% retracement and the resistance downward sloping trendline. (see above chart of 15 MTF)

At the top a possibility of an evening star candle is formed with a provision that the subsequent candle is a solid bearish candle.  Therefore I am looking for candles to close well below the opening at 24:00 GMT. Prices .Refer to my 1 MTF scalp trade chart below.

After the evening star, I am looking to short USDJPY below 97.65 about 10 pips below the low of the reversal candle. Prices for one hour moved sideway within the aqua color triangle. Than at 1:04 GMT price spike downward after Nikkei fall below yesterday closing after being up over 1%, and making its way back above 8,000 for the first time in over a month on the back of building stocks and the financials .  I could not take advantage of the fall as the move down  of 20 pips was fast and furious.

The first position I took was at the first aqua triangle after  USDJPY bounced off the pivot point with a sell signal of  B&S, LCD and MACD.

My second entry was a buy with a buy signal of MACD and B&S with the red lag moving above 15. The third entry was a sell with corresponding B&S, LCD and MACD. The red and blue lags was moving below 85.

The final entry  for the session aws a buy with buy signal of B&S, LCD and MACD with blue lag already above 15 and red lag started approaching the 15 level.  

Difference of Data

                                             Chart 1
                                            CHART 2

When analyzing the forex market I used two charts from two different brokers to ascertain data stability. Technical analysis depend almost entirely on price data. Any compromises or error of price data affected the resulting analysis. 

Take for example this morning.

Chart 1 is a 15 MTF of USDJPY by FXDD while Chart 2 is a 15 MTF of USDJPY by ActivTrades.

For  both charts, Point A occurred at 11:45 GMT with a price of 98.63 while the swing bottom at point B happened at 15:00 GMT at a price of 98.00

Than the two chart differed at 21:15-21:30 GMT (the aqua color ellipse) with ActivTrades spike widely for two period candles. The spike at ActivTrades breached the support at C (98.10). The spike caused difficulty  to ascertain the validity of fibo expansion and subsequently the target point D.

Normally, for analysing the market I refer on the FXDD chart but my trade will be with ActivTrades.

My current technical analysis is base on the following indicators.

1. Laguerre

2. MACD

3. Centre-of-gravity (COG)

4.  EMA

5. Pivot points

6. Bollinger Bands

7. Fibo

 

Early morning sentiment for USDJPY is expected to be bullish based on my perception that

1. US session was in a downtrend and expected a reversal at asian session.

2. Wall Street slipped into red territory in late session with S&P closed slightly lower by 0.4%. Nikkei is expected not to be affected.

Looking at Chart 1, price at Point B is at the lower green curve line of COG indicating an oversold position. From point B, prices inched upward by early Australian session and hovering around the 60 period ema,, 38.2% retracement and the middle of COG (blue curve line). By 24:00 GMT prices moved over the 50% retracement and 98.20 level. The red lag is also above the 15 level. Prices is expected to touch next round number 98.50.   

Correlation between the US dollar and the Japanese Yen.

The forex week began with a weakening of the US dollar: it lost ground to all the currencies, except the Yen.  

Since two months ago, the forex market has seen a correlation between the US dollar and the Japanese Yen. Whenever the dollar becomes stronger, the Yen beats everybody else, including the dollar. And vice versa i.e.  - when the dollar weakens, the Yen weakens even more. This happened on the last Non Farm Payrolls announcement, it happens now.  

On weekend, the fears that the Chinese Prime minister Wen Jiabao expressed regarding the US debt, triggered a fast response from President Obama. Obama wants to spend more money, thus print it out. 

This money printing devalues the dollar. 

The main economic data being released today is the TIC Long-Term Purchases, which shows the money flow. It’s expected to stand at 44.3 billion, more than 34.8 billion last month.

Instead, the TIC flows showed a large net outflow from the US in January. $43 bln in long-term US securities were sold in January and a net $148.9 bln was sold including bills. This is not USD friendly data and will whip up fears that the US is having trouble funding the deficits.  

Technically by 7:45 am New York time (11:45 GMT), USDJPY cross reached the fibo extension of 127% at point A  and the next candle was a reversal engulfing candle. The high point at A touched the green line of centre-of-gravity indicator indicating a toppish level. Before the TIC data being released, the market has indicated a bearish US Dollar. (refer to the 15 MTF chart of USDJPY below).

My scalp trade start at  12:00 GMT, with a bearish stance. Refer to  1 MTF chart below.  Take a short position with a sell signal of BS and LCD (the first aqua triangle). Close my position at 200 period ema support. 

My second entry is for long at positive MACD and the blue lag move above 15. Price is moving above green centre-of-gravity indicator (COG) , a reversal for bullish. Target price at 61.8 – 76.4% retracement or  the top of COG. With the two position I achieved my target profit of 30 pips. 

Monday morning-expectation of bullish Nikkei

Looking  at the 15 MTF USDJPY chart, the cross is nicely moving along the downward sloping channel (the blue line channel).  One hour before Asian session began a bear candle push down to the major support of 200 period ema and than a spike candle penetrating the 61.8% retracement and find support at the lower channel line. The spike has a small body and the following bullish candle confirmed  a formation of  morning star bullish reversal. At Asian session opened(23:00 GMT), the move has carried the prices to the 50% retracement level.

Normally I started my scalp trading at 24:00 GMT. At this juncture I am pulling for a further uptrend of USDJPY since traditionally what had  happened during the US session will be reversed. A downtrend during previous US session is expected for a invalidation of uptrend in early Asian session.

And furthermore,  USDJPY  in early morning  Asian session has a tendency to move in tandem with the Nikkei  and I expected Nikkei to be  bullish at the opening due to the  last Friday higher Wall Street. 

Friday the 13

I have been studying the  forex market for about a year. Early on my trade and study, I will be waiting in front of the monitor up to a 6-8 continuous hours stretch. I found it was a chore and it get into my nerve staring at the screen waiting for the market to give me a proper signal all day. 

I finally devised or more aptly found a trading system that is inline with my trading habit. The system has been demo trade and also live trade for the last three months and along the way I have made minor adjustments for the system. I have introduced the system to a few friends but due to different temperament, trading habit and experience of my friends the system did not work too well for them. As it is known that winning the forex market depends 70% on the trader, the other 30% is the system. The system was developed so as I will be on my desk staring the monitor at maximum of less than 4 hours at one stretch. Due to my time zone, I choice to trade on USDJPY. I trade for 2 sessions. The first session will be the Asian session that I will start analyzing at about 23:30 GMT or 7.30 am, Malaysian Time. I will end my trading at about 11:00 am Malaysian Time or 3:00GMT (12:00 Tokyo Time). The US session will be my second trading time. I will start at 8 pm Malaysian Time or 8 am New York time (12:00 GMT). I will end my trading at 16:00 GMT, almost at London session closing. My target is to gain a 30 pips per session or 60 pips per day. When I have my 30 pips I quit although I might have more than 30 pips if I stayed longer at the market.  

In my previous postings I have outline the system. Let us see through the system application on Friday the 13…suspiciously not a good day as believed by the Americans.  

On the 15 min chart, USDJPY has been down trending from point B. At 24:00 GMT,  support at 50% retracement of A-B could be a reversal point. Sentiment that carried over from previous US session indicated a further downtrend but historically during the Asian session the  market will act differently from US session. I am expecting an uptrend and this will be reinforced by an  expected bullish Nikkei on account of bullish Wall Street. Looking at the trusted lag  indicator confirmed my conviction on the reversal as the blue lag has moved over 15 and the red lag is waiting to move from it bearish level zero.  

My trade is as per chart below. 

At 1:23 (0:23GMT) a green arrow indicated a B&S buy signal. I ignored the signal since it was not accompanied by LCD buy signal. At the previous bottom there was tweezer  candles. I was expecting price to touch 60 period ema (light blue), corrected down and than moved further upward. This is based on the blue lag movement. The blue lag will move to 100 and than reversed down to go to zero. I will enter the market when the blue lag reverse and red lag move over 15. A red arrow i.e BS sell signal with sell signal of LCD at 1:28 is ignored as the risk to reward ratio is not favorable since the 20 period sma (i.e. the middle lane of BB) act as resistance is nearby. The subsequent B&S and LCD buy signal (aqua triangle) initiated by first entry for the day. USDJPY broke the 97.38 (the red horizontal line) i.e the top of a high closed doji (15 min chart) and my target is at the 200 period ema (the red line). Exited my position at the aqua triangle for 22 pips profit.

 At 2:05 a sell with a red arrow is ignored as no signal from LCD. The second aqua triangle was my second long entry with a buy signal of B&S and LCD. The blue lag is moving above 15 and the 76.4% retracement level is expected to be penetrated. My first target at 100% retracement-97.71 and second target at 127% retracement-97.88. Within one hour trading, I have more than 30 pips profit. 

Tales of two brokers

As mention in my previous post, the forex market is unregulated therefore we will be subjected to the whims of these brokers.  Since I have monitoring the forex market for the last one year, I have demo trade and live trade with more than 5 brokers. Each broker cause much heartache and headache for me.

For example this morning. I started to view the market at about 7:30 am Malaysian time or 23:30 GMT. Normally I online with two brokers. Currently I am using FXDD and ActivTrades. FXDD start its day at 21:00 GMT with ActivTrades at 23:00 GMT.

ActiveTrades was down for almost two hours i.e from 21:20 GMT to 23.06 GMT. Therefore I could not have an early morning analysis of the market using Active trades. I have to refer  to FXDD. I also checked other broker i.e LiteForex. I discovered that LiteForex data feed is almost similar to ActivTrades while FXDD is a bit differed. But since FXDD is quite established and has a bigger operation, normally I used FXDD as a reference broker.

Let see the 15 min USDJPY chart of the two brokers in early Asian session. FXDD with chart 1 and ActivTrades at chart 2.

At 18:15 GMT(21:15), FXDD showed a swing low of 97.03 while ActivTrades swing low was at 18:30 GMT(19:30) at 97.06.

The subsequent swing high for FXDD was at 19:15GMT with a price of 97.48 while ActivTrades happened at 19:15GMT at a price of 97.51.

From the swing high of B, USDJPY moved downward to C with prices did not touched 76.4% for FXDD but ActivTrades showed that prices did touched that level.

At Asian session, USDJPY approached the 23.6% level (point D), ActivTrades get as high as 97.45 at 23:30GMT while FXDD touched that level at 23:00GMT.

The reversal carried it down to 97.02(point E) at 0:15GMT  with a small spinning top candle for both brokers.

At 0:44GMT a correction caused a toppish candle at  97.26 exactly at 50% fibo retracement for FXDD while ActivTrades at 97.25 with a level in between the 50% to 61.8%. 

In conclusion, through the experience I gained by demo trading with different brokers, it is better that if we want to trade we use at least two brokers for check and balance. Usually price tweaking  and system down or hang did not happened at the same time. if one broker is tottally shut us out, at least we can still trade with the other one.

USDJPY 98.00

There were a lot of rumors flying around concerning the USDJPY cross. It was mentioned that a sell orders lined up at 99.00 by Japanese exporters with sell stops  below 98.00.and then there is a talk of option at 99.00 and the prospect at this price of being protected thereby could help limit USDJPY upside potential.  

On the chart, USDJPY was  limited by the downtrend blue line and it has been a sideway moves since Tokyo lunch hour. A descending triangle was formed with base at  98.30 which is 38.2% fibo retracement and 127% fibo extension. About one hour before US session open (refer to the aqua color triangle) prices tried to penetrate the daily pivot point but failed and a dark cloud cover candle was formed. The 60 period ema sloped downward and started to detach itself from the 200 period ema. 

I am waiting for the cross to breakthrough the 98.30 level during the US session. Few minutes before, it did crash through but a spinning top candle was formed. Finally at the opening of US session prices moved strongly downward passing by the weekly pivot point and the daily Support of S1. It settled its low at  261.8 extension which is 97.94 or  near the double zero 98.00. 

Wall Street is up so did the Nikkei

The USDJPY was boosted by comments from Fed Chairman Ben Bernanke at the opening of US session. (Point A of the above chart).  He said the U.S. government remains committed to ensuring major banks have the capital necessary to weather the recession and meet their obligations.

As Wall Street opened, equity showed sign of life as stock benefited from speculation that the uptick rule will be reinstated. The uptick rule – abolished in 2007 – forces shorters to sell shares at a price higher than the previous trade, and is seen by many in trading circles as vital to ending the current bear market run. The stock uptrend is further supported by Citigroup chief executive Vikram Pandit leak memo to Citi’s staff stating that the bank had been profitable in January and February, and the current quarter would be its best since 2007, when it last made a profit. 

The stock strength weighed on the dollar early in the day before losing that link shortly afternoon. USDJPY  went to the top at B that ended with a bearish hangman candle. The cross has a mild correction of 38.2% (point C) that are being supported by the 60 and 200 period ema’s. A reversal was initiated by the harami candle and pushed USDJPY  to point  D (30 min after opening of Asian session). At point D a toppish bearish harami indicated a reversal of yen downtrend. 

 Yen strengthened  on account of expected bullish Nikkei. Nikkei was bullish after booking a 26-year closing low the previous day, buoyed by higher Wall Street. Furthermore, economic data from Japan sprang a surprise in the early morning when Japan reported a better than expected core machinery orders with a fall of 3.5%. Most traders was -expecting a fall of 5.3%.The data are considered to be an indicator of capital investment by Japanese corporations and are closely watched.

US dollar under pressure

The USD  come to an extensive selling after lunch during the Asian session. USDJPY broke from the bearish declining triangle formed during the morning Asian session to find support at 200%  fibo expansion of A-B swing.(refer to the 15 min Chart of USDJPY above). The fall was partly attributed to heavy selling of US dollar by certain Asian institutions. An inverted hammer candle triggered a price reversal 30 mins before Europe open. The cross moved upward into the daily pivot  point  with a evening doji star at the top. 

Prices breached the uptrend line and pushed the cross downward to the 261.8% fibo expansion, A bullish harami pattern was formed and prices consolidated sideway with a symmetrical  triangle. At US session opening (12:00 GMT)  a doji was formed. Prices break the triangle on the downside  move and the 200% fibo expansion level. I was monitoring the market at that time and initiated my short trade. The target will be the bottom part of the declining channel.

USDJPY after Deficit Current Account Balance Report

After it has been fueled by the risk aversion return, USDJPY recovered on the news of a record Japanese current account balance deficit in 13 years and  Japanese exports showing a whopping 43% y/y slump. CFTC data for Tuesday March 3rd revealed that investors have continued to reduce net long JPY spec positions, which are now about half of their end January levels.

How does these news impact on the yen ?

I based the news impact employing the fibo analysis and candlestick pattern. See the chart below

At the points of reversal, it was painted with a reversal candles pattern.

Point A- morning star

Point B- harami

Point C-engulfing

Point D- shooting star

Pont E- morning star/hammer

Point F- dark cloud cover 

Point A (23:45 GMT) – the above economic reports was released at 24:00 GMT, USDJPY shot up to B on the bad news. The prices corrected badly by 76.4% to C. Prices than expand upward during European session up to point F (11:45 GMT or  15 min before US session open). 

Point F is a 100% fibo projection (expansion) of  A-B swing (the first reaction on the economic news), with projection taken from the top of B.  

It is also a 100% fibo projection of  C-D swing with the projection taken from the point E. 

I began my scalp trade at  one hour before  US session open i.e. 11:00 GMT and using level F as the turning point I look for a short  entry. With Point F at about  99.20 my first target will be 99.00 which is about 23.6% retracement of E-F swing.  Breaking that level will be the second target at 38.2% retracement at  98.91 and the final target will be within the 50%-61.8%retracement. I am looking more on the round number i.e. 98.80 which is the 50% level.