Day by Day, hourly analysis of EUR/JPY currency cross on the foreign currency market (FOREX). Sell and Buy signals on a technical basis Use signals at your own discretion.

Tuesday, October 12, 2010

Early AM update & Monday Recap

Firstly, my apologies to those expecting the update yesterday. I ended up not trading (it was Columbus Day here in the good 'ole USA) and took the day off.

The weekend saw the pop of the 300 EMA to the upside. This wasn't out of the realm of expectations, as Friday's late PM session action broke the 100 EMA, and most likely would have popped the 300 that day had it not been for the close. Last week saw the EURJPY tank, and a retracement was expected.

Monday was another prolific day for the EURJPY bears (which must have broad teethy smiles as I type this). Despite the retracement to "114.721" (the session high), PA quickly resumed the bearish trend, thoroughly smashing through the 100 & 300 EMAs only seven hours into the week. After breaking, PA flirted close to Friday's lows (only about 11 pips off), and then got cozy with the 100 EMA into today.

Today is just another slaughter for the BoJ (really starting to feel sorry for these guys). We saw PA briefly break the 100 EMA @ the open, kissing the 300 EMA for a bounce down. Breaking the 100 EMA once again, PA has plummeted almost 70 pips as I write this.

When I first started this post, I watched EURJPY smash through S3, and am currently wondering how much farther we are to drop in today's session (as we are only about 6 hrs into the day). It's hard not to imagine a little old fashion quantitative easing coming out of Japan in the next few hours to stem the bleeding; and we might see a return to the 100 EMA before the day is out. That being said, should there be no BoJ intervention today, we could very well see PA flounder all the way down to S4 (112.743), another 50 pips from where we are at the moment.

  • The bears are hungry. Continued downward pressure on this pair has those holding shorts singing praises. Hold short, and don't expect any buy recommendations in the near future.
  • Expect the BoJ to come out either today or this week in another vain salvo in this iteration in the FOREX War.
  • The moving averages continue to be everyone's close personal friends. Don't get greedy and trade against them, as this bear market will trample your account.

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