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This week I wanted to touch on an old favourite of mine - the U.S Dollar/Japanese Yen currency pair. I believe there could be some trading opportunities available for those of you comfortable with Foreign Exchange trading, and across the principles taught in Safety in the Market courses.
At time of writing (Monday September 28) the US Dollar looks to have made a bottom against the Japanese Yen at 88.22, as shown in Chart 1 below (FXUSJY in ProfitSource)
Chart 1
click to enlarge
On Monday, we saw a nice example of a key reversal signal day, also known as a Doji candlestick pattern. The move down from the April 6th high has so far been 1323 points, which is a fairly standard size range for the Dollar/Yen, if a little larger than previous moves.
There is a lot of talk about a recovery in the US Dollar, but I’ll believe that when the charts convince me – for now, I see the Dollar/Yen still clearly entrenched in the bear market that started on June 22, 2007.
The tops on the Dollar/Yen this year have been coming in early in the month on our Time by Degrees dates, meaning early October would be one place to watch for this bounce in the market to end.
As for price, the Gann Retracement Tool can give us some good pressure points to watch and it has been a good servant during this entire bear market range. Chart 2 below shows the Gann Retracement Tool in ProfitSource.
Chart 2
click to enlarge
The 50% and 62.5% retracement levels are always worth watching on a market, especially based on the recent history of the Dollar/Yen.
Time will tell how far the Dollar will fall, but I can see it touching 82 by the end of the year, and below 70 in the first quarter of 2010.
As always, we simply wait and watch as the market unfolds and tells its story. The pattern I discussed at the Master Forecasting Summit is continuing to unfold, giving us a very interesting few months in the lead up to Christmas.
Those of you new to Foreign Exchange trading, I recommend you have a read of some of my past Trading Tutors Newsletter articles to get a further understanding of the practice, before jumping into a trade.
Or those of you a little more advanced that possess a solid trading plan, good luck with your trading!
Be Prepared!
Mathew Barnes
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