Hello to All !

As we had with all other Major Holidays all year long all over the world…we have Scheduled News Data Points moved ahead due to Christmas on Thursday.

Primarily, the majority of the Data will be concerning the U.S. and early in the day the U.K…but also a bit of the Euro Zone.

As we have every year on Christmas Day…Japan rules the airwaves with Data all day long.

Now…to get to my premise of today’s title…

Over the past few years during “Christmas Week”…we have the logical cause and effects of Data…but often we will see “underlying sentiment” surprises.

Price Action that one would think would result often does not…and Price Action that does take place is often illogical. 

In my view, I find this to be a result of Institutional Sentiment.

One aspect we have to always be aware of during the End-Of-Year climate in all the markets is the idea of differing Agendas.

For us on the Retail Side, we simply focus on Price Action and our various reactions to it.

For the Institutional Side… their Agendas are ones of squaring Quarterly and Yearly Books, covering losses and protecting gains, moving Funds around the various Products they work with, and so on.

As a result, there is occasionally a “skew” in Volume, Volatility, and just general “Behavior” of Currencies as all of these ideas are factored in.

Think about all of the macro-concerns you may have a the end of the year…Taxes, Budgeting, and such for the coming year. The Institutions have similar concerns in closing out 2008 for “their Homes” as well !

Concerning the U.S….and to a lesser extent all others, we should not be taken aback by generally weak Data Points across the board.

The Recessionary aspects and overall concerns of the last few months will not simply take a “Holiday” just because of Christmas and New Year’s!

Since we do have so much Data out of the U.S. and Japan this week, how about a look at Dollar Yen!

On the Monthly, here…even though we always have the idea and question that these “Players” are probably out of the market…the April 1995 Support Base here may cap Price Action in the 79.70’s.

(click once for captures)

On the Hourly, we have a wonderful “V”-Bottoming formation here that is textbook in nature. Due to its’ momentum “bounce” here…an appreciation to a dynamic Resistance level around 91.50 followed by the 38.2% Fib @ 92.24 if your view is Bullish over the next several Hourly Cycles.

If your view is Bearish due to the Hourly Bear Flag here…and you are in support of Dollar strength…then a re-test of the “Base” @ 87.00 is probable.

Being mindful of what the Yen is doing in its’ role with it’s own Crosses will give you additional perspective as well.

Perhaps, as always, the real indicator here will be the strength and weakness of the U.S. Stock Market…meaning if we will have our correlations or if we will be unwound and non-correlated.

Let’s see how we progress going into Japan’s “spotlight” Day each year of Christmas Day on the 25th, and we can re-examine Price Action.