Rising Dragon (GBPJPY) & Higher USDJPY ??
USDJPY is a lynch-pin currency and easily one of the most influential financial products on the board. A sustained move higher from here would have far reaching affects for many of the actively traded financial products worldwide. Many of us were hoping for a test of the historic support at 80.00. But 85.00 held and this pair gave us a key reversal on the Weekly chart in late Nov/ early Dec. Now all that stands in the way of an intermediate-term reversal on the Daily chart is the November high; which looks pretty flimsy to me — see maroon line on Daily chart below. An intermediate-term trend reversal is one that most times means impulsive price action. That same impulsive price action is what leads many market observers to believe a long-term trend reversal is in the making. From even a long-term trader’s perspective it is not a move you would want to get caught on the wrong side of. Bottom line for me, a Weekly close above that Nov high at 91.32 could likely mean 100 isn’t all that far away.
And what you might ask would be the fundamental impetus for a Greenback rally? Habits; which die hard. U.S. economic numbers are improving because such a large a portion of Americans are habitual spenders. And that, over the last 30 years, has become the American way.
And if you like USDJPY for a year end pop you have to consider GBPJPY from the same technical perspective. GBPJPY AKA “The Dragon” has a potential double bottom in place marked by the September and November lows, with a higher low in place since. The Dragon is also currently trading above its Monthly Central Pivot; that and a close at these current levels — north of 145-50 or so — will put this pair on the “buy list” for at least one respectable market scan tool on today’s close.
As for a failure of these two pairs to move higher? Always a possibility, but it doesn’t look like they would have too far to fall, given how they’ve already found support just below.
“Don’t get caught short in a quiet market” as the old trading floor adage goes.
Jay Norris
www.trading-u.com
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