Talking Points:
- Technical and fundamental analysis can align for trades and conflict to sabotage them
- For USDJPY, a recent bearish technical break was temporarily snuffed out due to its connection to 'risk'
- The Yen crosses connection to underlying sentiment trends presents a different, big-picture view
Want to develop a more in-depth knowledge on the market and strategies? Check out the DailyFX Trading Guides we have produced on a range of topics.
The number of false technical breaks we encounter as traders is likely enumerable. So what determines whether a perfectly formed surge from congestion turns into a lasting move or quickly fizzles out to subsequently reverse? The substance of the 'staging' price action certainly matters, but more often the fundamental backdrop determines conviction. That was the case with USDJPY into last week's close and this week's open. A tentative drop below 119 (ostensibly a congestion pattern floor as well as 50 and 100-day moving average) stalled almost immediately. The boundary was a fundamental connection to risk - which rallied through Monday's session. We use USDJPY to illustrate how technical and fundamental analysis can harmonize for setups or undermine them. We look at the short-term elements for this particular pair and what the longer-term view still holds in today's Strategy Video.
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