Technical Trading Tips and Techniques by 
(Please click on the accompanying chart to enlarge.)
As we can see on the accompanying USD/JPY daily chart, price has reached resistance at a key intra-channel uptrend line as of this writing on Wednesday night. Oscillators like the displayed Stochastics remain extremely overbought, but still pointing up. Current support is at the 108.50 level that price broke Wednesday morning (resistance becomes support). If there is any further upward momentum on Thursday morning, major resistance to the upside resides around 111.50.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
The yen carry traders went long the dollar and short the yen and other commodity currencies as oil traded off some today; this blasted USD/JPY higher.
The Yen died today, FXY -1.4%. And the others were butchered: FXA -.7%, FXE -.3%, and FXC -.5%.
The US Dollar, $USD, rose 0.5% to close at $74.25 at 200 day moving average.
And the EUR/JPY moved back up: it is now cresting into an Elliott Wave 2 up; and will soon be going in an Ellott Wave 3 down causing massive disinvestmnet from stocks bonds and currencies globally.
The ‘mother of all yen carry trade unwindings’ is about to occur.
The author in ‘Calendar Yen Trading Patterns’ provides historical record that EUR/JPY and USD/JPY is frequently down in the month of August
Today’s action in the USD/JPY definitely is contrary to the seasonal norm as it boomed to 109.40, and could continue to do so; it is difficult to go short at this time; but going short EUR/JPY seems reasonable if one holds the investment maxim that I do: “In a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength”; thus today’s strength in the EUR/JPY to 1.699 is to be shorted.
Thanks for the insight, Richard!
- James