A-B-C-D Trade - page 133
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The Yen and Nikkei 225 has obviously been volatile, with whipsaw action. Let's address each:
Yen
The Japanese government has held press conferences to say that Yen spike in strength is not attributed to repatriation. They interviewed 16 large firms accordingly. The linked article has one person indicating that the time of the spike rules out repatriation.
Therefore, it is now blamed on speculation. The fact that USD/JPY remains below 80.00 convinces many that BOJ has its hand on the trigger (intervention). There is also fresh indication that the G7 will meet in order to address the possibility of a coordinated effort of intervention.
News is frequently updated, sketchy, and surprising, so the volatility will continue.
Tokyo blames yen spike on speculators, G7 to discuss crisis - Yahoo! News
From technical point, the Mar 11th high to Mar 16th low produces:
38.2% = 78.97 (at this level now)
50% = 79.80
61.8% = 80.62.
We do have, however, a BAJA bullish divergence at bottom.
Nikkei 225
For this index, we choose to use CFD JPN225 and start the plot with the high price at 9,930. This was the low from Friday Mar 11th, prior to the gap on Sunday - new week open.
That plot, with Mar 15th low 8,835 produces 38.2% fib of 8,944 and where it is now.
Next levels up are 50% = 9,133 (hit Mar 16th) and 61.8% = 9,921.
***
Things are simply too fluid and markets will react to latest news. Add threat of intervention, and we have a landscape not for beginners (and even unappetizing for experienced intra-day traders). In other words, you better be good.
From where we left off yesterday on EUR/USD, post #1311 had chart with fibs and fibo fan. We identified SELL entry at 1.3950.
The attached chart shows fibo fan moved down to Mar 16th 13:00 GMT high. Its .886 fan line caught the low just below the ABCD's FE 127. A tighter ABCD would have gotten us closer with a horizontal FE.
This trade was good for about +80 gross pips, to the .886 fan fib at 18:00 GMT candle. It was 3 hours later that the pair was dragged by the spike in USD/JPY.
Lost in the turmoil is the plunge by the DAX30, the German stock market index. Attached is the Daily CFD GER30.
We can see tremendous gaps down from Mar 11th onward. From a plot Aug 31st low and Feb 21st high, it is now sitting on the 61.8% retrace fib of 6436. That's a 1,000 point drop, about 13%.
The German government has advised their citizens to leave Japan, or affected areas including Tokyo.
The Yen rebounded as stop-losses triggering subsided, along with BOJ intervention fears during Asian. We see more pressure during Euro, to downside in test.
Euro rushed upwards in pent-up risk appetite after news of planned G& conference call designed to calm markets was well received, along with positive EU economic data releases.
Touching new monthly high at 1.4051, we plot retrace fibs and arrive at:
23.6 = 1.4019
38.2 = 1.3999
50 = 1.3983
While monitoring the after hours major indices, we can see pullback. This would drag EUR/USD down, if sustained.
US30 off its high of 11747, and now back at 11698 just below its 50-EMA on 1-hour
JPN225 down from Asian high of 9080 to current 8758
GER30 had hit 6608 and now fell off to 6563
***
EUR/USD now at 1.4008
On a day with 2 major decisions, on top of the Japan situation, Forex is quite volatile. The G7 conducted their conference call and all countries pledged their support to counter Yen strength.
They didn't waste too much time as 00:00 saw what was described as coordinated intervention effort by multiple countries of the G7. USD/JPY now above 80.00.
Another report circulating is the ECB said the G7 will look to intervene with EUR/JPY.
***
The U.N. approved action on Libya, that can be described as applying/enforcing the no-fly zone, which requires taking out (attacking) Libya's anti-missle installations as a first step.
Reportedly, the U.N. can go beyond that, but details remain unclear to what extent and the time-line involved.
Oil soared to $103/barrel, as did gold to $1410.
Our conspiracy theory, based on that one candle/period when Yen spiked in strength:
Massive short on USD/JPY during a time when liquidity is low. This also takes out stop-losses since it is below significant low.
Anticipate BOJ intervention.
Take long positions USD/JPY, EUR/JPY, AUD/JPY, etc.
Collect profits after intervention.
An analyst from HSBC correctly points out that the Swiss Franc will experience its own share of problems of being too strong due to the flight to safety, since the Yen is now in "intervention zone".
Attached is a split screen of the 1-hour and weekly charts.
The 1-hour plots High = Mar 16th 07:00 .9197 and low = 21:00 .8891.
That low is the Yen attack period, which also pulled down USD/CHF to a new all-time low. We can see the subsequent consolidation, until the U.N. vote on Libya was announced.
The U.N. decision popped USD/CHF up to the 61.8% retrace fib of .9080. However, unlike the Yen, it has drifted back toward the lower range, and is now at .9030.
The weekly chart on the right plots high = Nov 28th 2010 and low = Dec 26th 2010, producing a regular 138.2 extension to the downside of .90007. The current candle is resting on this fib, based on close price (body of candle). We can see the next support level at the 161.8 = .8826.
The just-released economic data further strengthen the CHF. We saw the Swiss National Bank, Switzerland's Central Bank, take intervention action last year, but to no avail. It's a situation worth monitoring.
USOIL now below support and trading at 102.25. The 1-hour SQ_9 has 90-degree level at 102.50, which is/was support.
However, when we plot fibs, from low = Mar 16th 22:00 and high = Mar 17th 12:00, we see an approximate 161.8 extension (probing above), and a 138.2 of 102.10. This is next support level.
Sorry, had to push buttons. The attached chart shows USOIL just bouncing off 180-degree level of 101.58. Chart is GMT+1.