Meteoric AUDJPY Rise

I'm starting to get more than a little cautious about the stellar increase in the AUDJPY over the last several days.

While it's true that markets can continue to move higher or lower for long periods of time it's important not to get too caught up in recent events. In fact, though we all react to these things at different rates, you can consider it a warning whenever there is something to get caught up in.

Insidiously, it is often those things that happen over a very long period of time that we forget to take notice of. For example, the smart phone has been growing in leaps and bounds and will probably do so for years, but at some point it is likely to turn into the next PC. If you haven't noticed PC's are now relatively cheap commodity products which leaves PC makers turning to the service sector in an attempt to fuel continued growth.

In any case, this is a point at which I have to resist ramping up the aggression factor in my trading robot... and the notion that it might be a good idea to take a bigger bite out of upward movement needs to serve as a warning to me.

AUDJPY: Tweezer Top?

The market has about 6 minutes to change it's mind.

If it doesn't, this is going to look like a tweezer top on the 1 hour.

Now, that would be something I'd consider bearish (I originally typed bullish).

If you read my last post... you know I'd like that to happen!


Now about 4 minutes left.

Zzzz. No market reaction on the hour.

Maybe the tails weren't long enough -- or I'm too impatient?

... continuing ...

I am finally seeing some downward movement though it is much later and much slower than I'd have expected:


Hurray... I guess.

AUDJPY: Decision Point

I'm looking at the 3HR chart at the moment. We seem to be looking at an impending strike on a recent support line.

If this resistance holds we might have a technical setup that would allow for a nice gain.

Take a look:


See how there was something of a W shape starting in the middle of the 19th? See how the chart is currently on the second touch down of a second W? If we bounce off the support line and "fire" the technical pattern, we could be in for another move towards the upper end of 72.

... continuing ...

However, be warned, the 1HR looks like a head and shoulders pattern riding along the support line:


... continuing ...

The 15 minute chart looks promising:


The question, as ever, is whether or not this will be backed up by future results.

... continuing ...

Also on the 15 minute chart:



Sure. Now what? It's always the nature of the game, risk vs opportunity.

AUDJPY: Weekend Analysis

If you've been following along you'll notice that I keep mentioning that I am long term bullish on the AUDJPY.

One of the reasons is that I think we've seen the worst of the panic and risk aversion. Another reason is that I think we're now closer to a recovery and following period of economic expansion than a lot of people expect.

Given these two thoughts, and the following chart, it's easy to see why I expect a slow return to higher AUDJPY prices;


However, what appears to be a large double bottom over a period of months does little to tell us what the price will be doing in the short term. The following 3HR chart shows us that we might be at a critical juncture:


The resistance line is spot on since early March. The support line is a bit spottier and appears to be in the midst of being tested. If you've kept your powder dry this might be a good time to figure out how to play upcoming moves over the next week.

Flipping to the one hour we see the consolidation trend that I was talking about at the end of last week:


Given my overall expectation of a long term upward trend, and the fact that the lower line in the 1HR has been active for a couple months, I'm apt to speculate on a new leg in the upward journey.

Don't forget, if you make big bucks because of my blog, feel free to hit the donate button. If you lose your shirt, you are on your own! ;)

EURUSD: Weekend Analysis

I don't generally trade the EURUSD but since it's the weekend I seem to have some extra time on my hands.

Here are a series of charts, in varying timeframes, that I'd use to get a general feel for this currency pair.

First, let's look at the 1D chart to see what's happened over the long term. I've compressed the chart a fair amount in order to get it to fit into a single snapshot -- you should be able to click to expand the image:


First, notice that over this period there has been an apparent double bottom. In fact, I've drawn a trend line to help identify this. As well, the currency pair has not yet broken above a resistance line drawn from the middle of July until now. In the big picture I'd expect the price to bounce around between these lines until a major news event or until the lines have converged.

Frankly, I'm not sure what will happen to the Eurozone or North America with respect to economic growth and interest rates, so I refuse to try to call which direction a long term breakout will go. However, that doesn't mean you can't speculate on either or both directions.

Moving to the 3HR, below, it looks like we might be able to fall a bit, but more importantly, we've broken a recent support point:


Notice the horizontal yellow support line that has been breached? If I were going to put money into this market I'd be thinking that we've got some room to drop. Don't get me wrong, it certainly doesn't have to, but often a support or resistance breach is a prelude to further movement in that direction.

On the 1HR chart, I see something that looks like a setup to me. See how the price appears unwilling to break the lower red support line? If I were going to play EURUSD I might wait to see if the currency makes it's way back to upper resistance line and then short the pair:


It's easy to call shots on the weekend and obviously when the markets open on Sunday this could all be trash due to news of some type. However, until things get shifted in some major way I'd either try to counter-trend a long position back upwards or simply wait for the short setup that seems suggested after a move back up.

Finally, this is not advice, and I could very well be completely out to lunch. However, this is my take on the situation. You should simply consider this one interpretation. Obvious weak points, from other points of view, are previous highs and lows as resistance levels, Fibonacci points, and so on.