Furthermore, the Yen’s gains also come at a time when the BOJ indicated that the Japanese economy is slowing as the nation’s export that led the recovery is losing steam, especially after the industrial production declined, in addition to the higher unexpected unemployment rate, which surged to seven months in June.

The Japan’s current account surplus unexpectedly shrank for the second straight months during June as weakening exports, signs the recovery in the world’s second largest economy is losing momentum.

A higher yen has a negative effect on the nation’s exports, which is the main pillar of growth in the nation, accordingly, pushing Japanese monetary policy to keep bank’s loan program unchanged and monthly government bonds purchases on August 10.

However, the Bank increased its credit program to 20 trillion yen ($232 billion) during March, and in June unveiled a 3 trillion yen, which encouraged short-term loans. The BOJ is unlikely to ease policy any time soon, it will “naturally consider what it can do” if the global economy stagnates and the yen’s gains accelerate.

The central bank’s assessment for the economy remain unchanged as it said in the statement accompanied the rate decision “the nation will continue to expand”, adding that there is no sufficient momentum to guarantee a sustaining recovery in domestic and private demand.

On the other side, the Chinese economy issued today its trade balance surplus widened during July recording $28.73 billion, which climbed more than expectations that referred to $19.60 billion, and it came higher than a previous surplus of $20.02 billion. The China’s trade surplus is the biggest since January 2009.

Imports declined 22.7% from a year earlier coming after a decline by 34.1% and forecasts referred to 30%. On the other hand, exports (YoY) inclined 38.1%, it came less than the prior 43.9%, while analyst’s estimates of 35%.

Market Brief

The USDJPY traded at 85.42 after reaching 85.02 on Friday, the weakest since Nov. 27 as Asian stocks fell and Goldman Sachs cut its growth outlook for the US and Japan before reports tomorrow forecast to show China’s exports rose at a slower pace. The EURUSD was at 1.3281 after rising to 1.3334 on Friday; a three-month high and EURJPY trading at 113.45 on speculation the Federal Reserve will take steps tomorrow toward providing more stimuli. China’s exports probably climbed 35% (prev. 43.9%) and imports rose 30% (prev. 34.1%) in July from a year earlier according to reports to be released tomorrow. Goldman cut its 2011 growth forecast for Japan’s real GDP to 1.4% from its previous outlook of 1.7% while reducing its 2011 estimate for US growth to 1.9% from 2.5%. The BOJ is likely to hold off on increasing monetary stimulus tomorrow as policy makers aren’t convinced the JPY’s approach toward a 15-year high will derail the nation’s recovery.

NZDUSD slid to 0.7325 and NZDJPY fell 0.2% to 62.57 after the house prices rose 4.1% (prev. 5.2%) in July at the slowest annual pace since December, undermining prospects the RBNZ will increase interest rates. The NZDJPY also declined as the probability that the central bank will raise borrowing costs in September reduced as compared to the last month. AUDJPY traded at 0.9177 from Friday when it climbed to 0.9222, the strongest since May 4 and AUDJPY was at 78.40 falling a third day as Asian stocks extended a downturn in global equities, sapping demand for higher-yielding currencies.

Time Frame: H1 & H4

Lets analyze this chart and determine how strong the kumo breakout is:
1. There is a bullish Tekan/Kijun cross
2. There is a candle close outside above the kumo
3. Chikou confirms the bullish bias
4. The leading kumo is bullish

Now lets analyze why this may be a weak signal:
1. Notice that the bearish kumo has a flat top, this can be dangerous as it represents “price
equilibrium” and price likes to come back towards it.
2. There is a bearish shooting star (reverse hammer), there has also been a failure to make higher
highs, maybe its just retracing? …maybe
3. We may be expecting a bearish Tenkan/Kijun cross soon
4. We have a convergence of Fibonacci levels, the 23 and 100, which provides support for a
bullish bias, we also have a pivot level at 1.0551, which provides further bullish support

Before I place my order for this amazing opportunity, I need to confirm this bullish bias via another
method.
In general we can see that price action is still below the kumo, there is a bullish cross but its would be
considered a weak signal, chikou also hasn’t yet broken out of the kumo.

Note: 200SMA is purple, 100SMA is blue, 50SMA is yellow, 20SMA is turquoise, 10SMA is orange
1. ADX is showing a bearish bias
2. The leading kumo is bearish
3. The 100 SMA is providing resistance
4. The 200 SMA is providing resistance
5. The central pivot point is 1.0597
Even though the H1 chart shows a promising bullish trade, I still remain bearish. Even though NFP
numbers came out with 162K, worse then the forecast but better then the previous of -14K, I don’t
believe price action will be able to break past 200SMA. The best course of action would be to either
enter a bearish trade with a tight stop loss just above the 200SMA, or simply wait for Monday or
Tuesday, to see how the market will continue to move.

5m: Bearish – Tenkan nearly cross Kijun, but price is far awat from tenkan. Waiting for them to cross and price normalize.

15m: Bearish – Price already breakout Kumo and close below it.

30m: Bearish – Tenkan still not cross Kijun but other rules is done.

1h: Bearish – Price already cross Tenkan. Short term bottom already in place, but right now price is crossing back tenkan and waiting to close below it

4h: Bearish – Tenkan and Kijun cross again. All rules done!

Daily: Strong Bearish

Weekly: Strong Bearish

Action: Waiting for tenkan and kijun to cross and price normalize. BUT, I already sell EUR/JPY hehehe

p/s: sorry for technical error.. this analysis is for EUR/JPY not GBP/JPY

5m: Bearish – Price retrace and try to retest Kijun after Tenkan has cross Kijun earlier.Wait to enter short after price fail to retest Kijun.

15m: Bearish

30m: Bearish – Price retrace and try to retest Tenkan.

1h: Strong Bearish

4h: Strong Bearish

Daily: Strong Bearish

Weekly: Medium Bearish. Price try to break Kumo (cloud)

Action: Wait to enter short after price fail to retest Kijun on 5m chart

GBP/USD – 1.6021

Most recent candlesticks pattern : N/A

Trend : Sideways

Tenkan-Sen level : 1.5968
Kijun-Sen level : 1.6063
Ichimoku cloud top : 1.6268
Ichimoku cloud bottom : 1.6178

Original strategy

Sell at 1.6060, Target: 1.5860, Stop: 1.6105

New strategy

Sell at 1.6060, Target: 1.5860, Stop: 1.6125

Although the British pound has continued to edge higher after rebounding from 1.5850 (this week’s low) and correction of recent decline to 1.6063/64 (current level of the Kijun-Sen as well as 50% Fibonacci retracement of 1.6277 to 1.5850) cannot be ruled out, reckon renewed selling interest would emerge there and bring another decline later. A break of yesterday’s low at 1.5904 would signal correction from 1.5850 has ended, then retest of this support and the recent low at 1.5832 would follow, once the latter support is penetrated, then the decline from 1.6879 should extend weakness to 1.5790/00 but previous chart point at 1.5708 should remain intact.

In view of this, we are still looking to sell cable on recovery for such a fall. Only above minor support at 1.6113 (previous support, Thursday’s low) would suggest low is in place, then correction to the Ichimoku cloud bottom (now at 1.6184) would follow.

Bias: While 145.50-60 supports we should see a retest at 147.28-45 before lower again

The underlying MT direction is bearish while the daily bias is bullish. Therefore it is likely that any gains are corrective only. Note resistance levels that could stall any rally. Consider bearish set up patterns at key resistance levels or should price threaten to break below any key support levels that would indicate a possible resumption of the move lower. Only consider a possible larger reversal higher should key MT resistance break.

Consider buy set ups at: 145.50-60 or 146.13-20

Consider sell set ups at: 147.28-45 or 145.40

Daily Bullish

Yesterday saw the 143.63 low hold and we have seen strength since then. I feel we do have a little more to go. While 146.13 caps we should see a shallow pullback that should hold above the 145.50-60 area. From there I feel we will see extension back above 146.13 and then through the 146.44-74 corrective highs to then revisit the 147.28 corrective high and maximum 147.45… I feel this will cap for losses. Thus only above 147.50 would maintain the bullish momentum for a move through 147.81 & 148.48 en route the 148.72-00 area.

Medium Term Bullish

28th January: I feel that the 147.28-45 area can be retested but should hold. Only breach would extend gains to 148.72-00 initially.

Daily Bearish

I remain bearish overall but feel we are more likely to see a retest of 147.28-45 first. Look for a bearish trade set up here. Only an earlier break below the 145.50-60 pivot support would cause earlier reversal lower through 145.00 and to 144.45, 144.05 and back to teh 143.63 low. I suspect it should hold on first test but note lower targets then at 142.91 minimum and probably 142.14-45…

Medium Term Bearish

27th January: We’ll need a break of the 143.74-144.07 area to extend to 142.14-45 at least. Next support is at 141.60-85… and if seen it will raise the risk of a retest of the 139.30 low

Ian Copsey
FX-Forecaster

The Euro (EUR) broke through 1.4250 in early Asia and the rout continued in Europe with markets turning aggressively bearish on the single currency. Momentum to the downside is accelerating and the major 1.4000 level is on the radar. December German PPI -0.1% vs. 0.2% forecast. Overall the EUR/USD traded with a low of 1.4079 and a high of 1.4291 before closing at 1.4110. Looking ahead, January PMI services forecast at 53.9 vs. 53.6 previously. January PMI manufacturing forecast at 51.8 vs. 51.6.

The Japanese Yen (JPY) was very strong on the crosses as risk aversion spiked higher and EUR/JPY dragged down the rest of the market. USD/JPY remained buoyant however as the Dollar was very strong. AUD/JPY traded at 2 week lows as traders unwound more positions from the recent rally. Overall the USDJPY traded with a low of 90.78 and a high of 91.48 before closing the day around 91.25 in the New York session.

The Sterling (GBP) good economic data helped the GBP continue to outperform the rest of the risk trades. December Claimant Count dropped -15k vs. -3k forecast and the Unemployment Rate dropped to 7.8% vs. 8.0% forecast. EUR/GBP pounced on the Euro weakness to trade at fresh 5 month lows below 0.8700. Overall the GBP/USD traded with a low of 1.6242 and a high of 1.6373 before closing the day at 1.6280 in the New York session. Looking ahead, January CBI Orders forecast at -37 vs. -42.

The Australian Dollar (AUD) was hit hard in Asia as the Euro crumbled and rumors circulated that china was curbing lending by the nations banks. The slide continued in the US session as stock losses mounted and gold crashed. January Consumer Sentiment soared 5.6% m/m. Sentiment is still strong towards the AUD but markets will be looking for the dust to settle before reestablishing longs positions. Overall the AUD/USD traded with a low of 0.9071 and a high of 0.9241 before closing the US session at 0.9100.

Oil & Gold (XAU) crashed through support at $1130 to test $1110. Overall trading with a low of USD$1107 and high of USD$1142 before ending the New York session at USD$1112 an ounce. Crude Oil slumped nearly $2 a barrel on risk reduction. Crude Oil was up -$1.72 ending the New York session at $77.30.

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Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

4H:

We’re inside the bear flag yet, a breakout below 147 area is recquired first, for further down movements. Technically GJ is forming a BIG bearish bear flag on 4h.

The Euro (EUR) came under pressure breaking below 1.4450 support in Asia as rumors of Germany’s Merkal losing political support spread throughout the market. A denial as the start of Europe did little to help with technical damage done and risk aversion beginning to tick higher. Overall the EUR/USD traded with a low of 1.4338 and a high of 1.4511 before closing at 1.4375.

The Japanese Yen (JPY) gained across the board as the market fled to the safe haven and heavy longs pared back. EUR/JPY was the worst hit as the single currency came under intense scrutiny and lost some of back up reserve currency status. Also helping the Yen to gain is speculation that the Chinese Yuan may strengthen at some point. Overall the USDJPY traded with a low of 90.61 and a high of 91.32 before closing the day around 90.80 in the New York session. Looking ahead, November Industrial Output previously at 2.6%.

The Sterling (GBP) held up better than most against the USD as the Pound found support on EUR/GBP constant selling. Still Cable fell from the 1.6300 level in the lower 1.62’s before recovering into the US close. GBP/JPY fell to Y148 but the uptrend remains in place. Overall the GBP/USD traded with a low of 1.6212 and a high of 1.6353 before closing the day at 1.6260 in the New York session.

The Australian Dollar (AUD) was hurt by the change in investor appetite as the market was caught long after the good jobs data on Thursday. Falling commodities and a resurgent USD pushed the pair back to lower 0.92 support. AUD/JPY fell heavily as long liquidation accelerated from recent highs. Overall the AUD/USD traded with a low of 0.9214 and a high of 0.9319 before closing the US session at 0.9229.

Oil & Gold (XAU) came under pressure from broad USD strength. Overall trading with a low of USD$1127 and high of USD$1146 before ending the New York session at USD$1132 an ounce. Slipped in the the $78’s as the recent slide continued. Crude Oil was down -$1.44 ending the New York session at $78.10.

Easy Forex
http://www.easy-forex.com

Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products