It’s no surprise to me that we’ve seen a turnaround, or at least a halt in the falls we saw yesterday. People talk about indicators to assess overbought or oversold conditions but I’m not one that uses them. I prefer to just simply see what the market is doing and how it is performing as that is usually the best guide you’ll get. Don’t get me wrong, I’m not knocking the tech or the users of it but it’s just my experience over the years when such indicators didn’t exist that you have to learn to do it the hard way. I saw a big move in the yen pairs that just got my gut feeling saying they were coming to an end. GBP/JPY had a big move even by its standard and anything over 250 pips will get my interest up. The fact that we saw nearly 400 by the time I clocked off and further after that was too much to resist.
We’ve had a bounce in both but the question remains is this a rally to jump into at these levels or are we likely to see the selling resume.
The 100 dma is holding in USD/JPY and we can see support at 100.75. So far resistance has come in at the 101.50 area which I marked as support yesterday.
USD/JPY daily chart 04 02 2014
GBP/JPY also pulled up after touching below the 100 dma but as I’ve said previously I don’t hold as much strength to the tech in crosses as I do the respective majors.
GBP/JPY daily chart 04 02 2014
Cable pulled up at one of the strong levels I have highlighted recently at 1.6260 and the level marked the old double top from October last year. We also fell back below the broken 2009 resistance line but are back above now.
GBP/USD daily chart 04 02 2014
Should we move back lower I’ll be looking at those levels holding on another test or it will be time to pull the plug on my position.
From yesterday I’m long USD/JPY from 101.05 & 100.80 as well as GBP/JPY at 164, 164.50 and 165.10 and cable at 1.6260 & 1.6305 and short EUR/GBP at 0.8295. I’m happy with the positioning and the momentum in the market at the moment, but I’m going to be watching very carefully how today plays out and whether we’ve steadied the ship for a bit or just catching breath before the next big moves down. Yes they are good levels I’m in at but they are nothing until I’ve taken profit and the money is in the bank. One quick move and I could be underwater in mere minutes.