Friday, June 24, 2011
Trend for 24th of June 2011
Hello everyone. Today none of strategies that I use showed me any signals for trades, so I will simply try to deal with what I expect in terms of trends in the nearest future. These won’t be expectations for long term trends, but maybe medium, which means that I won’t expect moves that I predict to last very long. As always, I want to remind you to take my ideas just as ideas, not some kind of recommendations. This is free education and not some advice to sell or buy securities. My opinions might be very subjective. So, try to look at the thing from professional point of view and not to follow anybody’s ideas (including mine) on investing blindly. Ok, let us go to my predictions now.
I have already mentioned my bullish expectations regarding Japanese Yen last week. Nothing really happened. Again, I do not have any fundamental data to back up my predictions. I simply see a pretty bullish technical picture for Japanese Yen by simply observing price action in most of Yen pairs. Some of the pairs (gbp/jpy and cad/jpy) have already started going down in waves, yet others are still in their ranges, possibly getting ready for a breakout downwards.
The best technical picture is in aud/jpy pair (I mentioned it last week). You can see how the pair comes to the same support level, jumps off it and runs to a resistance. However, every time a resistance for the pair is lower and lower. This tells us that Yen bulls are very strong and a distribution of other currencies in regards to Yen takes place. You can see it eur/jpy and even usd/jpy too. As I think that Japanese Yen and US dollar will be the strongest currencies in the nearest future I would not think it would be wise to place a strong currency against another one. We have to choose the strongest won and buy it against the weakest one.
It could be gbp/jpy pair, or cad/jpy pair. One possibility to play the situation is to sell a breakout of a range Yen pairs are in. However, this is a risky choice as we can see a lot of swings and trends developing in waves nowadays. If a breakout happens and it is pretty strong (let us say downwards) , you can very often see practically every day lower lows and lower highs. Then you add to a position when you see a rally and a reversal pattern at the end of it.
It would be a bit different to play a downtrend, which develops in waves. Then it is better to take the initial position when a currency runs up (has a counter trend move and sell at the top of a rally). You do not sell or buy breakouts when currencies or any other securities in this fashion. The basic rule for trading these kind of moves is to buy low in an uptrend and sell high in a downtrend (when counter trend moves happen).
Hope this helped to see how to trade a possible short term downtrend in aud/jpy and other pairs. Tomorrow I will talk a little about precious metals and oil.
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.