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EURJPY Small Trade Targeting 138.50 Area Entered

I have entered a small trade with a tight stop for a target in the 138.34 area and a stop just below 135.50. Price broke the ascending wedge and settles against its top but couldn’t break it. Let’s see how this one plays out.

The Dollar Index Bounces From 79.36

It’s not much of a bounce but is a bounce none the less. Take a look at the chart below and you will see the support that has held three previous times before, not counting that small run down in-between the first two times. Assuming that the current status holds for the next few days, we should be able to expect a move back to the top trend line. A small down trend line currently around 79.80 may hamper that move though considering the big news on schedule over the next few days. I anticipate a USD break out, but I am not sure which way yet, I will wait for confirmation of a break, but for now I hold a few positions that are long USD.

EURGBP Back At Top Resistance Line, ADP 80k Worse Than Expected
I am looking for a break of the resistance line, but will most likely not see one today. With the resistance line so close to the top of a big candle, we are more likely to see it tomorrow, or tonight. I was just looking over some news items from this morning and realized that the news wasn’t that great on the US Economic front. The one thing that stuck out the most was the ADP number. All of the “recession is over” folks were talking this number up when it showing positive growth in negative numbers a few weeks ago, but I am finding it noticeably missing from discussion now that it has come in almost 90k worse than expected. If NFP prints similar numbers watch out, risk appetite may dry up very quickly. How that may affect the USD is uncertain at this point.

Anecdotally, I had two very interesting conversations lately. One with a gentleman that owns a business that provides a business opportunity. For the last 20 years some of his best years were the times when the economy was in a slump, this because people were looking to supplement their income. This time around, he has laid off his entire staff except for one salesman and hasn’t ordered a single new machine in 12 months. The second was a conversation a colleague had with an industry leading trading platform and education provider for equities and currency trading. His comments echoed those of the first person. No one is buying! No one is going outside their comfort zone right now, and if they are, it’s on the cheap. NFP is looking to be  more and more interesting as time passes.

EURUSD Took Only A Short Break Before Pushing To 1.4200
It has been interesting to see the top side pushes in this pair over the last few weeks. First the head and shoulders gets created, and the neckline gets pierced but not closed below. Then we have five days that push above 1.4100 but can’t close above it. Then last night a really good solid break to the top side is now breaking 1.4200. It is looking more and more like today price will finally close above 1.4100, invalidating the head and shoulders and a test of 1.4338 will almost certainly follow. I stated in earlier posts yesterday, that this action felt like a last gasp before the USD comes back to life. I am still of that opinion, but my trading may reflect otherwise if the opportunity presents itself, and we see notable breaks.

SNB Makes Me Ask The Question “Why”, As GBPCHF Favors More Swiss Muscle

THe SNB has made several statements in the last few months that have continued to have the effect of weakening the currency, which has been their goal. I understand the general idea behind it, but it really makes me wonder. How would the currency be affected if several of it’s counterparts, like the EUR and GBP suddenly encountered a crisis of confidence, let’s say a banking problem. It would certainly sky roket, as long as it wasn’t affected by the same problem. My question is, do they know something, aside from the fact that a strong CHF negativly affects their economy, and are they trying to keep the curreny as light as possible before a coming storm? The BoC has faced the same problem in the last several weeks, as a strong CAD, tied to rising oil, began to crimp exports and manufacturing, but they have held tight had made only a few veiled attempts to scare the CAD lower. In the end it won’t matter why they were doing it, but right now it makes me wonder if all the EUR and GBP strength is going to evaporate as quickly as it appeared.

GBPJPY Trade Update
As mentioned in yesterday posts, I have a very light risk long trade on this pair with a target of 162.50. Current prices have me down on the position about 25 points and my stop was narrowly missed last night. Certainly a break below the lower ascending support line would end the trade. Right now though, it is the resistance around 159.50/60 that is causing the problems for the trade. Unable to seriously crack it yesterday, coupled with the inability to sustain a break there today, may make me rethink the trade.

EURJPY Set To Take On Upper Bollinger Band

After yesterday’s theme of BB centeline resistance, the new theme for the pair will be “when does it get to the upper BB”? With an average range of almost 200 points, we could be the pair tap the top line within three days. That is assuming that we will have a consolidative day in the mix. THe break of the BB and the short term resistance line in red, suggest that a test of the top side is coming and 138.28/32 will be the first test with 139.21 after that. If US NFP suggests that the economy is actually getting better, risk appetite could surge and by mid next week we may be testing 142.00 +.

USDCAD Flood Gates Ready To Burst

Current prices are sitting right above a flood gate of activity and its the USD that will get wet. With the USDCAD knocking on that lower line a significant break could be in the cards. If it happens though I would be a little concerned about the length of today’s actual move the pair is already past its ATR30 of 174 points. With the NY Cut coming up at 10:00 AM a significant move, if it’s comeing may be around that time.

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