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Trading Risk Trends in Japanese Yen Pairs with Stock Market Levels

By , Sr. Technical Strategist
11 October 2013 21:04 GMT
  • Short Term stock market levels to time risk trends
  • GBPJPY bigger top in the making?
  • Monitor USDMXN for support at slightly lower levels

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Jamie is the author of Sentiment in the Forex Market.

Dow Jones Industrial Average

Daily

Trading_Risk_Trends_in_Japanese_Yen_Pairs_with_Stock_Market_Levels_body_dow.png, Trading Risk Trends in Japanese Yen Pairs with Stock Market Levels

Chart Prepared by Jamie Saettele, CMT

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-After a dip under the August low (the index was actually overlapping with mid-April levels). The DJIA rallied 2.93% in 2 days. This is the largest 2 day rally since 12/31/12-1/2/13.

-Sideways action since May is either a topping formation or consolidation before a fantastic ‘blowoff’ that ultimately ends in tears.

-While in the range however, be aware of the following levels: 15250 and 15382 as near term resistance as well as the line that originates at the November low and 14945 and 14795 as supports.

Trading Strategy: Know these levels in order to time risk trends.

GBP/JPY

Daily

Trading_Risk_Trends_in_Japanese_Yen_Pairs_with_Stock_Market_Levels_body_gbpjpy.png, Trading Risk Trends in Japanese Yen Pairs with Stock Market Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-The line that originates at the November 2012 low came into play as resistance at the 10/1 high.

-The decline from the 10/1 high is impulsive (5 waves). While the drop may could constitute a flat, it would be silly not to consider the alternative given the reaction at the underside of the mentioned trendline and early month high.

-GBPJPY broke below support (red rectangle on chart) on 10/3. Price has advanced in recent days to challenge the level as resistance. So far, that level is holding.

Trading Strategy: Looking for a high on Monday. Resistance extends to 158.70 (10/1 close).

NZD/JPY

Daily

Trading_Risk_Trends_in_Japanese_Yen_Pairs_with_Stock_Market_Levels_body_nzdjpy.png, Trading Risk Trends in Japanese Yen Pairs with Stock Market Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-The line that originates from the June 2012 low defines the long term trend but the trend since April is sideways.

-NZDJPY ends the week at a Fibonacci confluence; the 61.8% retracement of the decline from the April high and 61.8% retracement of the decline from Sep 19th-Oct 2nd. Friday’s high is also right at the 9/26 high.

Trading Strategy: Exited longs Friday. This market ends the week at resistance but the near term picture is too uncertain to take a near term view. Support is 81.15/50 and resistance is 82.60-83.05. If the market reaches these levels, then I may take action.

USD/MXN

Daily

Trading_Risk_Trends_in_Japanese_Yen_Pairs_with_Stock_Market_Levels_body_usdmxn.png, Trading Risk Trends in Japanese Yen Pairs with Stock Market Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-USDMXN has been trading in a broad range since the June high. The pattern may take the form of a 3 point ascending triangle. Such patterns have the ability to produce intense bullish market moves.

-Thursday’s spike (10/3) probably caps the advance for a bit. Levels to watch for support are the 50% and 61.8% retracements of the rally from the September low at 12.96 and 12.87.

Trading Strategy: Monitoring this market for support at lower levels. The break of the recent range portends a move towards 12.85. Stay tuned.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele

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11 October 2013 21:04 GMT