Follow up on yesterday's USD/JPY short term analysis

Yesterdays suggestion was to go short with limit around 107.84 - 107.52. Price action hit 107.76 Looking more towards the long term progress now... thats all for today.

Don't forget long term...
http://gotpips.blogspot.com/2008/02/look-into-2008.html

USD/JPY Short term / Long term analysis

-SHORT TERM-

If we take a look at the hourly chart, we're looking for a crossover per ADX/DMI as well as MACD levels shooting downward. We're seeing a lot of action the past few days with the pair - it seems like now is a good time to book a nice profit by going short. Look to place your limit with a range anywhere from 107.84 - 107.52.

-LONG TERM-

Taking a look at the daily chart, we see a clear downward trend channel. It may be too soon to short the pair - it seems as though MACD,ADX/DMI,and Stoch are hinting that the pair still has some space to move upward before trending back down. If you have enough margin to sustain a 2-300 pip movement, then you can look to short the pair now, otherwise, I would stand fast and wait till it tests the channel resistance before placing the trade.

Follow up yesterday's USD/JPY

As per yesterday's analysis, the pair DID break past resistance 107.12 area and shot up further than my prediction which was 1/3 the signal range. It actually trended up 1/2 the signal range which was a healthy amount of pips for those who went long around the 106.70 level.

Triple Top - USD/JPY - 30 Min Chart

Lets use StockCharts.com's explanation of what a triple top is to quickly review what we know about this technical signal(you can just skip to bottom to get to the point):

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Prior Trend: With any reversal pattern, there should be an existing trend to reverse. In the case of the triple top, an uptrend or long trading range should be in place. Sometimes there will be a definitive uptrend to reverse. Other times the uptrend will fade and become many months of sideways trading.
Three Highs: All three highs should be reasonable equal, well spaced and mark significant turning points. The highs do not have to be exactly equal, but should be reasonably equivalent to each other.
Volume: As the triple top develops, overall volume levels usually decline. Volume sometimes increases near the highs. After the third high, an expansion of volume on the subsequent decline and at the support break greatly reinforces the soundness of the pattern.
Support Break: As with many other reversal patterns, the triple top is not complete until a support break. The lowest point of the formation, which would be the lowest of the intermittent lows, marks this key support level.
Support Turns Resistance: Broken support becomes potential resistance, and there is sometimes a test of this newfound resistance level with a subsequent reaction rally.
Price Target: The distance from the support break to highs can be measured and subtracted from the support break for a price target. The longer the pattern develops, the more significant is the ultimate break. Triple tops that are 6 or more months old represent major tops and a price target is less likely to be effective.

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The pair can go two ways right - it has a major resistance at the 107.12 area and if that were to be broken, we could see it continue to trend upwards for at least 1/3 of the signal range which would be anywhere from 20-30 pips. The alternate scenario would be the pair shooting downwards and continuing to break more support lines. In this type of situation, I would go with one of the following two options:

Long EUR/USD -- 20 pip stop loss

Long USD/JPY -- 20 pip stop loss

Limit: Having one of those positions liquidated, it should leave you with a 60-75% idea on the trend of the pair along with a few pips profit. I would then throw in a trailing stop with trigger set at 50% profit and let it ride.

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If then OCO - If 107.12, Long USD/JPY with limit @ 107.40 Stop @ 107

If then OCO - If 106.82, Short USD/JPY with limit @ 106.31 Stop @ 107

Of course, if one of these two orders execute, you should close out the other order accordingly.

A look at 2008

Lets step aside and take a glance at what may be some big 2008 potentials:

1. Investors returning to metals.

We've seen a huge growth in the price of gold in 2007, it may very well surpass $1000. Look for an appreciation in AUD. CAD may very well benefit from it as well as 45% of their country's GDP comes from gold.

2. Oil prices drop

Most of the presidential candidates are pushing for the "Green Movement" - utilizing bio diesel fuel,solar energy, hydrogen energy,etc. as a mainstream basis of energy. With the likelihood that Obama will take the victory, lets take a look at what his outlook is like on energy and environment:

Reduce Carbon Emissions 80 Percent by 2050
Invest in a Clean Energy Future
Support Next Generation Biofuels
Set America on Path to Oil Independence
Improve Energy Efficiency 50 Percent by 2030
Restore U.S. Leadership on Climate Change

What does this mean? Oil prices down , CAD ++

3. YEN YEN YEN

Carry trade pairs are my favorite pairs, not just because my last name is Yen. We are looking at the unwinding of the Japanese Yen carry trade due "broad-based risk aversion". Simply, investors have historically borrowed Yen cheaply to invest in global markets. We see this in the long term charts for currencies like GBP, USD, NZD, etc. Due to predictions of spiraling high-risk markets(equities + commodities), investors will be likely to close out their long GBP/JPY, USD/JPY, NZD/JPY trades therefore buying back the Yen and pushing it to levels as high as 140.

4. Yuan being revalued

The US was the only country to come out of the olympics with a profit, all other countries took losses. The market in China has skyrocketed in 2007. I remember speaking with a few clients and they would tell me their strategy on buying stocks - pick a random company and dump money. The olympics is not just about competitive athletics - its a multi multi billion dollar business. Right now China is flooded with tourists, businesses are booming, but what happens when the 2008 Beijing olympics are over?

5. Federal Reserve cutting interest rates

Doesn't seem the Reserve is done cutting rates yet. The country is in recession and the monetary policy NEEDS to be changed. Our money used to be backed by gold and silver, but nowadays it's just being printed out of thin air from the Federal Reserve. When the Reserve cut rates, they are simply printing more money because the government asks of them to. Most people dont even realize that the Reserve is nothing but a cartet of banks and doesn't even have ANYTHING to do with the government - it's a seperate entity just like the IRS. The country is screwing itself over for a lack of better wording, due to its foreign policy and the middle class is taking a huge hit(as always). The amount of money that we borrow from China is so extravagant that if China were to decide to sell off 5% of their U.S. treasuries, our stock market would collapse - panic would flood the markets, and that would inevitably lead to the downfall of the country. Too bad the only presidential candidate who understands this, Ron Paul, is ignored or bashed by the media.
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Lets keep our eyes peeled for good opportunities this year. I took a few big losses early on in 2007 but have revamped my whole strategic approach and mindset since.

"Keep on going and the chances are you will stumble on something, perhaps when you are least expecting it. I have never heard of anyone stumbling on something sitting down."
- Charles F. Kettering,

Followup on the AUD/USD short from yesterday

.8915 right on the money as predicted. Credit goes to A. Serafin for an on point analysis.

"We are what we repeatedly do. Excellence, therefore, is not an act but a habit."

Look to short AUD/USD with limit around .8915

%D crossed over %K per GET Stochastic, and trendwise -DMI and +DMI are looking for a crossover. Looks like a great opportunity to score a quick 30-40 pip hit.