Jamie's Pick: 08/16/12
I’m suspect of the USDJPY rally as long as price is below 8009. This advance follows the lowest 5 day range since mid-January (and lowest 20 day range since late December). Similar 5 day ranges (red dots on first chart) were registered in December and October. Each time, the initial move was wrong and completely retraced. This is a function of the false breaks that accompany markets undergoing a shift in volatility expectations. The advance has extended today but a level that may produce a reaction is 7960, which is defined by the 61.8% retracement of the decline from 8062 and the 161.8% extension of the 7790-7879 rally from 7816.
The EURUSD is in play today. I favor shorts into 12330 with a stop above 12385 and a 12190 target.
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