[B]My picks:[/B] Short USD/JPY to Target 92.64, Stop Above the 200 SMA
[B]Expertise:[/B] Fundamentals Combined With Technicals
[B]Average Time Frame of Trades:[/B] 1 Day - 1 Week
A series of lower lows in USD/JPY and a failure to break above the 200 SMA suggests the pair is due for a break lower. Immediate support looms at the 100 SMA (95.75), but with FXCM SSI (a contrarian indicator) showing traders remain net long the pair, sentiment also indicates that USD/JPY could fall. Something else that I am also keeping in mind is the inability of the DJIA to break above its 200 SMA, which sits at 8736. As long as the index remains below that line in the sand, the potential for an increase in risk aversion works in favor of a broad Japanese yen rebound. I am looking to target the 61.8% fib of 87.15-101.47 at 92.64.
EURUSD Update: Yesterday I said that I was looking for an opportunity to sell EUR/USD, and with daily charts showing that price has reversed from the top of its rising channel formation and with RSI now down from overbought levels, I believe this may be it. I’ve place a stop above today’s high of 1.4340, and I’m looking for a drop down toward the 50% fib of 1.2885-1.4340 at 1.3620. That said, I’ll feel much more confident in this position upon a break below channel support and former congestion near 1.4000. Traders should also beware the fundamental event risk assocated with this trade, as the European Central Bank is schedule to announce their rate decision and provide details on their 60 billion euro credit easing program on Thursday morning.
USDCHF Update: Providing another blow to my confidence, the USDCHF low from yesterday was [I]exactly[/I] the level at which I had placed my stop. If you’re looking for an opportunity to try to capitalize on a USD rebound, this may be a good pair to focus on. I, on the other hand, will now focus my energies on EUR/USD.