EUR/JPY back to this mornings opening levels
If it's volatility you are seeking, then don't look any further than this pair. We are now back at this mornings opening levels. This pair was trading at 107.50 yesterday and rallied 200 pips from there so don't be at all surprised to see nasty pullbacks from time to time.
It's December so we can expect rallies and dips to be more extended than usual, probably twice as much as normal. So if you like buying 50 pip dips for instance, wait for 100!
Quick overview of intraday flows
Only major flows of note have been in the Yen crosses with Samurai launches ensuring plenty of demand for EUR, AUD and NZD.
Price action does suggest some barriers maybe in EUR/USD and early European trade is undoing some of the earlier Yen cross flows.
EUR/USD: Stops aplenty on topside
Dealers are being a bit vague on where the stops are but 4 major banks all list plenty of stop-loss levels right through the 1.31 handle and above 1.3200 as well. The market's tendency is always to be at its most bullish near the top so we do need to be wary of that. Nevertheless with EUR/JPY breaking higher, and AUD/USD also threatening a big bullish break, the signs for those stops are looking a bit ominous.
USD/CHF: Might be worth a risky long near current levels?
There are two lines of support just below present levels and this pair looks like a good risk-reward play. Obviously there will be stops just below the market but nevertheless this pair could easily turn and join USD/JPY on the bull train, if real money players do start to buy in earnest.
Definitely its risky being long USD and short CHF whilst the fiscal cliff negotiations are on-going so keep stops tight if venturing into bull territory.
EUR/JPY: High so far 109.35 and little sign of any dip happening
Relentless is probably the best word to describe EUR/JPY at the moment with no sign of any pull-back whatsoever. Optionality is expected to increase dramatically as we near 110.00 but this level is also likely to act like a magnet.
EUR/JPY: Makes new highs above 109.05
Absolutely no sign of any panic Yen buying before the weekend, quite the opposite in fact. It looks like this pair will open in Europe on its highs and the bulls will be smelling more Bear blood. Best to stay out of the way of this particular trend train. (I'm all out of cliches now :) ).
Investment fund launches underpinning JPY crosses this morning
Retail investment funds or Samurais have been launched this morning in Tokyo adding to demand for the Yen crosses. The currencies which generally benefit the most from these events are the USD, EUR, AUD, NZD and CAD.
Gold under pressure in Asian trade
Gold broke below $1705 and triggered stops all the way down to $1696 before stabilising.
It's unusual for Asian markets to sell Gold but then again there is an ever increasing divide between the heavily manipulable futures markets and the solid physical markets. If you want to be long Gold long-term then buy physical because in the unlikely event that we fall off the fiscal cliff, its not the promissory notes you will want to be owning!
EUR/JPY steady in early Tokyo trade
No sign of any heavy profit taking in EUR/JPY in early Tokyo trade so it would seem that the path of least resistance remains higher. No word yet on any heavy orders so I suppose the bulls will be happy to stay long.
EUR/JPY session outlook: Where does it go from here, is it....
Got some old 80's 'Haircut 100' number running through my head this morning; that's a worry!
I sold yesterday afternoon in anticipation of the ranges holding and some 'buy-the-rumour-sell-the-fact' action post-FOMC. Now I'm looking at a vertical trend which is potentially targeting levels above 111.00, so I'll keep my positions small and try and use intraday swings to get out of the red. Volatility is likely to remain high so I think we need to trade the spikes in both directions, but with a bullish bias now.
I think its feasible that we see more topside spikes now towards 110 and even higher but they will provide bulls with excellent profit taking opportunities for a re-load near 108.00.
AUD/USD session outlook: Buying dips towards 1.0510/20 preferred
The AUD/USD has broken up out of its weekly wedge formation and buying dips back towards previous resistance at 1.0510/20 now looks like the obvious play. Next technical resistance is at 1.0620 with barriers reported at 1.0650.
There is some minor economic data which is unlikely to cause volatility. Most movement will come from AUD/JPY, which is in a vertical bullish trend targeting a previous daily high at 88.65; support should now be firm near 86.50.
Day ahead in the FX market, Thursday December 13th
- Yen crosses will be the focus with EUR/JPY +1.5% in last 24 hours:
- Market reportedly extremely short of Yen and adding to positions:
- I'd expect to see some Yen buy-back ahead of the weekend election:
- AUD/USD has made a technically bullish break above its wedge formation; expect bids now at 1.0510/20:
- No major data releases during Asian trade:
CHF/JPY might be worth a look at these levels
This is not a pair I trade at all but I'm thinking that the recent Yen selling is looking a lot over-stretched so it's a matter of which cross pair the contrarian wants to look at. Perhaps the CHF might be a good currency to short, the roll on this trade must be pretty flat and with real money starting to sell the CHF, surely it might be worth a look.
I'm not able to check my charts at the moment but some of you excellent technical analysts might be able to find a good entry level on the 4-hr chart?
GBP session overview
- EUR/GBP should encounter technical resistance near .8080:
- Cable is expected to trade between option levels at 1.60/1.62 but any FOMC surprises could challenge these edges:
- Not much in way of UK data today:
- Interbank player prefers to buy dips to 1.6070 for this session so likely some buying interest just below there.
USD/JPY: Looks like early Europe fancies a test of range highs
USD/JPY is fast approaching recent highs near 82.80 but I find it hard to believe that there are any really large stops above there? If the market is already extremely short Yen, how will they add to these positions?
Regardless of my ramblings, technically speaking a break above 82.80 targets 84.15.
Quick overview of Asian market
- Very quiet again in Asia with majors trading in 10 pip ranges:
- Market expects slight shift in policy angle from FOMC but spending set to continue:
- AUD longs and Yen shorts still reported at extreme levels but little sign of a turn:
- Regional equity markets +0.5%, Gold $1712/oz.
EUR/JPY: Selling smalls near 107.40
I'm really not sure what is going to happen in the Yen crosses so as we are currently in 'rally mode', I will sell into this and see what happens. For me this is often the best way of trading, simply trade very small lots, buying dips and selling rallies until I get a strong feel for what's happening.
Those who want to follow my very slow progress can do so in the members section.