Yen Reversal — More to Come
The markets gave Central Bankers exactly what they wanted as a sharp rally in the former “carry trade” markets USDJPY, EURJPY & GBPJPY kicked off in the Tokyo session and carried through London and the U.S. session with U.S. Stock indices trading dutifully higher as well. These same pairs have been a proxy for stock indices for years now and in fact led them out of the hole in March. EURJPY was up over 2% for the session even before the FOMC’s vanilla statement, and was +265 pips at 129.26 as of the NYSE close.
Technical Analysts can appreciate today’s price action given those markets listed above gave us a potential bottoming candle on significant long-term support yesterday. And the buy signals generated once they cleared yesterday’s highs were in-line with the Weekly trend, which was the most important piece of the puzzle.
The strongest major on the board today, AUSUSD, and the current leader of the currencies is giving us a longer-term upside target of approximately 82.50, if it can close above resistance at approx. 73.50.
Because there are not too many of us out there who have ever experienced trading in a bear market, there is not much talk about the benefits of operating in a market that gets ground down as many of these pairs did. Any little short covering spurt gives the trader quite a respectable return in percentage terms. Imagine a once $80 stock that gets knocked down to $10. If you owned it as an investment from 2 years ago, you are not happy. But if you buy it as a trader at $10 and sell it at $20 you’re estatic.
Jay Norris
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