Well folks, you all know that I have been working on the paradigm of a diagonal triangle, and provided for a throw-over at the end of the 5th leg of the pattern. This throw over has happened last night and we should ideally look for a strong close today. Take a look a the chart and you can decide for yourself.
Its been a while since I posted a Yen chart. We have been running into some selling at 96.23. Considering that the low seen earlier today was 94.50, even this is a strong move. Part of the credit for the recovery goes to the Japanese Finance Minister who said that rapid forex moves was undesirable for economy. and there is a need to avoid rapid forex moves at all cost. Now we all know that this market is not going to turn around unless all the G7 central banks show up in concert (and even that will work only if the market is spent on one side). Yet, some knee-jerk reaction is to be expected, and if we break the resistance at 96.23 in New York today, maybe we will get a move to 96.64. When we get there, we should try and sell some dollars with a stop above 96.74. That is a very close stop, and we could see both the sell and stop-loss order done within seconds of each other! But then we do have a resistance at 96.69 and if one wants a really, really close stop, this is it! Enjoy.
By now you would have realized that what this blog is attempting to do is to give you a sense of direction, and also highlighting pressure points. The most recent example of the value of some of the charts I post here is the call on Sterling yesterday. Take a look.
Here is yesterday’s post for easy reference.
The Saudi markets have lost more than half its value since the beginning of the year. How much more pain can they bear? Looks like there is scope to fall by at least another 12%. Check out this chart.
The Governor of the Bank of England, Mervyn King, has said today that the UK is probably in recession now and 2009 is going to be difficult. He also asserted that he stands ready to cut interest rates again if that is required. Clearly, we need to remain short in Sterling. (Early resistances come at 1.5345 levels). I am posting two charts for your use today, suggesting a short-term target of 1.5090 and 1.4865. But in the bigger picture, we will likely see a test of 1.4570. Remember one thing, folks. We are not using technical analysis to predict the future. We are trying to organize the way we trade into safe compartments. So, when I have 1.5090 as one objective, I will take back a good part of my shorts near there, but be ready (like Mr King) to sell the Pound again if that level breaks. If the analysis helps us to re-enter at better levels, then that is great! Good luck.