My apologies for the late post this morning. My wife is having some health issues that made for a late night. Probably nothing…but, it left me a little groggy. Given the markets’ current state of flux, it makes picking an initial stance a little more challenging than usual.
So, we’ll pick up this morning where we left off yesterday — completing a very deep retrace of yesterday’s .618 opening pop, or angling for a .786 or .886 retrace of the move down from 1709? I’ll play along on the downside at the opening, but will watch for a reversal at the white .500 (1694.28) or .382 (1692.89.)
The USDJPY broke out of the very narrow channel it’s been in since establishing the latest right shoulder last Friday — a pretty decent bounce at the midline of the falling white channel.
We should see a backtest of the neckline and broken rising white channel, which we’d normally associate with a rising equity market. However, a deepening equity sell-off as I’ve been discussing could also provoke a more meaningful reversal in the USD’s fortunes.
It certainly looks primed to rebound — at the bottom of a channel and falling wedge and .886 retrace.
UPDATE: 9:33 AM
UPDATE: 10:15 AM
The channel is holding so far, and the 15-min RSI looks like it’s running into resistance.
There’s a high probability of being whipsawed here, though, as there’s plenty of support at 1688-1690, and the neckline of the potential H&S (yellow) at 1686. Charts in a few…
UPDATE: 10:25 AM
I still favor the downside case we discussed yesterday, though it’ll take a break below 1684.90 to confirm. Yesterday’s rally to within 4 cents of the 1700.18 high sure didn’t clarify things.
So, in the meantime, 1704-1706 remains on the table. This is definitely one of those times when it might be better to step aside and let the markets decide.
Getting some momentum going on the downside, but we’ll likely run into that support mentioned above — probably at the intersection of the falling white channel midline and .886 at 1689.72.
UPDATE: 11:08 AM
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