A-B-C-D Trade - page 44
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Japanese Finance Minister has announced an appearance later today according to reports. Speculation abound and certainly weighted towards possible intervention to weaken the Yen.
This in itself is verbal intervention.
Just watch, draw ABCs, etc.
EUR/JPY extension levels:
FE 100 = 109.21
FE 127 = 109.61
FE 161.8 = 110.12
Retraceemnt levels;
236.1% = 109.30
With USD/JPY, use yesterday's Asian high and today's Asian low to get:
138.2% = 84.03
161.8% = 84.23 (hit)
It is at the 161.8 now.
Here is chart o EUR/JPY with FE levels per alst post on subject.
A = 11:15 low 106.76
B = 18:00 high 108.24
C = 01:15 low 107.73
Pair now at the FE 127.
The Japanese Finance Minister just CONFIRMED the intervention.
Pardon as we are busy with new measurements with Yen pairs. Here is a broader pull.
USD/JPY 1-Hour chart:
Pull retracement fibs from:
High = Sept 12th 84.43
Low = Sept 15th 82.87
138.2% = 85.04
161.8% = 85.41
As we mentioned very early in this thread, it is very dangerous to chase these types of moves. It can whipsaw back down at any time.
After hitting resistance, both USD/JPY and EUR/JPY making attempt to gain further.
USD/JPY action tells us that pair respected fib pull with 84.23 as the FE 161.8.
We'll also pot a tight ABC.
A = 01:50 low 83.81
B = 02:20 high 84.57
C = 02:30 low 84.22
FE 61.8 = 84.69
FE 100 = 84.98
FE 127 = 85.19
FE 161.8 = 85.45
We keep an eye on multiple charts, with multiple S&R.
After hitting resistance, both USD/JPY and EUR/JPY making attempt to gain further.USD/JPY action tells us that pair respected fib pull with 84.23 as the FE 161.8.We'll also pot a tight ABC. A = 01:50 low 83.81B = 02:20 high 84.57C = 02:30 low 84.22FE 61.8 = 84.69FE 100 = 84.98FE 127 = 85.19FE 161.8 = 85.45We keep an eye on multiple charts, with multiple S&R.
Exit levels for advanced traders with intra-day long positions.
USD/JPY at 84.86, and approaching FE 100 84.98 area resistance.
EUR/JPY at 110.01, and approaching FE 161.8 of 110.12
Exit levels for advanced traders with intra-day long positions.USD/JPY at 84.86, and approaching FE 100 84.98 area resistance.EUR/JPY at 110.01, and approaching FE 161.8 of 110.12
As we were more focused on USD/JPY, there is a tighter pull with EUR/JPY that reslts in:
FE 100 = 110.20
FE 127 = 110.44
FE 161.8 = 110.74
****
Meanwhile USD/JPY has hit the FE 100 of 84.98. THis was actually 84.99 as we had Point A on the wrong candle by 1 pip. Close enough, this is still considered very precise.
For those new to this, welcome to the world of intervention. This is the first time since 2004 that Japan has conducted this measure. There are articles about this by Bloomberg and AP via Yahoo, with links provided below. We also recall the tumultuous late 1990's Yen intervention, when the gigantic candles were flashing brilliantly off of our computer screens, with each burst in price.
Basics are:
Japan, the 2nd largest economy in the world (sans China), is an island nation and imports goods, including energy. Exports are needed to balance trade. A strong Yen impacts exports negatively. The AP article quotes Toyota Motors stating that for every 1-cent reduction in the Yen exchange rate, it reduces their earnings by USD 350 million.
USD/JPY exceeded the 15-year low during the Asian session. When it dropped below 83.00, Japan’s Central Bank, Bank of Japan (BOJ) sold Yen and bought USD.
They didn’t waste any time after the election, despite the fact that the candidate most vocal about intervention lost the party election. No doubt Yen is seen as a “flight to safety” vehicle. With world-wide financial calamity, the strong Yen is simply crippling Japan.
Not to get too political, but isn’t this a form of currency manipulation? Ironically, the U.S. is ramping up possible action against China for pegging its Yuan to the USD. China relaxes the “band” periodically, mainly when it is under criticism.
Since we are technically in the “Advanced” section of our tutorial (see recent outline) we can now discuss technical trading during the aftermath of the physical intervention. We didn’t want to encourage jumping in, as there might be new/newer traders viewing.
We listed FE levels for USD/JPY and EUR/JPY, which were moving in tandem (same direction). The EUR/USD pair was pulled by both of those Yen crosses. Placing the 3 pairs side-by-side, on your screen, gives you a better picture.
USD/JPY
During live conditions, we mentioned that the first discernable pivot hit support at a fib price of 84.23.
Pull retracement from:
High = Sept 14th 06:00 83.71 (previous Asian session HIGH)
Low = Sept 15th 01:15 82.87 (Asian session LOW and intervention level)
138.2% = 84.03
161.8 = 84.23
Some traders entered long positions when USD/JPY surfaced above 83.71, the previous Asian session High. Some may have played the Bounce, intending to capture a few pips. A bounce did occur, down to 83.46, slightly more than a 23.6% retrace. They may not have known, at the time, of the intervention.
The spike started with the 1:35 GMT 5-minute candle. We reported it at 1:45. 10 minutes later, we confirmed it as physical intervention.
We had been speaking on a previous short position in EUR/USD and strongly stated that it was not a good idea to go into the Asian session, considering recent speculation of intervention. Although in the long-term, intervention rarely works, current trading would be affected.
There is also the added aspect of going into a new session which may have a strong and sudden move early on. The short trade was intended only to shave a few pips on the retracement. Therefore, the exit was easily the right decision.
The primary pair was clearly USD/JPY. The selling of Yen against USD, drags Yen cross-pairs.
Getting back to the swings and ABCs, we listed the FE levels but not the swing prices. Here they are.
1st ABC
A = 1:45 low 83.80
B = 02:20 high 84.57
C = 02:30 low 84.22
FE 100 = 84.99
FE 127 = 85.20
FE 161.8 = 85.47 (hit)
2nd ABC
A = 02:30 low 84.22
B = 04:45 high 85.12
C = 05:35 low 84.72
FE 100 = 85.62 (hit)
FE 127 = 85.86
FE 161.8 = 86.18
Attached 5-min chart includes all 3 fib pulls per above, as well as a volume indicator.
Once the advanced trader confirmed it was psychical intervention**, the trader would be in a position to trade the 1st ABCD. The pullback to form Point C was not a fib ratio. However, if we look at the open price of the 02:30 candle, it was within 1 pip of the 38.2% retrace fib. The body of a candle is also considered when conforming to fibs.
The pullback did hit the 161.8 (first fib pull) price of 84.23 as support, as explained above. Aside from monitoring the FE levels, this action told us that the next level of this pull would likely be respected. That would be the 261.8 fib price of 85.07. If this fib level is not a default level, you must add it to the MT4 retracement fib tool. Don’t confuse this with the fib expansion tool.
The extensions met all levels to 85.62..
******
The chart also includes data arrows. The 8:30 GBP data was negative. The cross-currency pair correlation results were:
GBP/USD decline initially but back up due to GBP/JPY intervention strength
GBP/JPY decline initially, then back up due to intervention strength
EUR/GBP goes up initially, then strong move down due to strength in GBP/JPY
EUR/JPY decline initially, then back up due to intervention strength
EUR/USD decline initially, then back up due to intervention strength
USD/JPY gradual decline initially, then back up due to intervention strength
If you are completely new to Forex, be advised that the currency listed in front of the pair is the one that reacts. Negative data on GBP will pull down GBP/USD.
If subject currency is listed 2nd then opposite is true, such as EUR/GBP reacting upward to negative GBP data.
* Dominant pairs, due to intervention, were USD/JPY, then EUR/JPY. Since both of these pairs were moving up strongly, it rendered EUR/USD somewhat choppy. Not saying that a trader could not make money on EUR/USD, just that it was choppy compared to the dominant pairs.
GBP crosses all had initial negative reaction for GBP, but continued toward Yen weaken bias or dragged accordingly.
** Since this was the first intervention, an experienced trader might feel that a strong upside still existed, even after the first thrust ending with the 13:40 candle. Using the ABCD technique assisted in determining resistance and exit levels. It also confirms extension when Point B is broken.
Alternatively, some experienced traders would have bought on the dip (pullback) to Point C.
U.S. data coming in at 13:15 was basically as per forecast, and was not a market-mover.
Japan intervenes in currency market to weaken yen - Yahoo! Finance
BOJ Becomes `Wild Card' as Kan May Push for More Japan Stimulus - Bloomberg
Attached is a 5-min chart of USd/JPY as we continue to track this pair in the aftermath of intervention.
As it entered the last European session, it retraced 61.8% from the last pivot up. After a revisit of the 85.76 high during the U.S session, pair proceeded to retrace during early Asian.
1) Measure with fib retracement tool from low of 10:40 price 85.55 and 13:05 high price of 85.76. This should be done well ahead of time. The low to high was easily identifiable.
23.6% = 85.58
38.2% = 85.47
50% = 85.39
61.8% = 85.30 (hit)
78.6% = 85.17
2) Plot ABC from top:
A = 23:40 high 85.73
B = 00:10 low 85.41
C = 00:45 high 85.62
FE 100 = 85.30
FE 127 = 85.21 (hit)
FE 161.8 = 85.10
This is a cautious retracement considering the intervention. The market should be jittery and would even react to a verbal intervention or the BOJ simply calling in to check rates, an intentional act to spur Yen selling due to jitters.
Basically, much more risk in shorting Yen crosses currently with intervention environment. Stop-loss can be dragged in a spike against the short position.
Monitoring this would be educational.
Do the same thing to EUR/JPY and EUR/USD. Place all 3 charts side-by-side. Right now, all 3 pairs are moving in tandem, with a down trend from 02:00 through 03:00 and consolidation.