Charts I’m Watching: Aug 9, 2013

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

I’ll try going long here at 1695.14, stops at 1694.  As yesterday, the key remains breaking 1700.18.

There’s also the matter of a potential falling channel with a (current) top around 1699 — increasing the importance of this price level.

UPDATE:  10:15 AM

The channel is holding so far, and the 15-min RSI looks like it’s running into resistance.

I’m going to get stopped out at 1694, so will play the short side. Stops at 1697ish.

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.

UPDATE:  11:00 AM

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

I’ll try a long position here at the channel midline — 1689.54.  Stops at 1688ish, though that just sets up more whipsawing with the intersection of the .886 (of the rise from 1684.91) and neckline at 1686.65.

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