A 2015 hike is back on, cos Yellen said so
What a difference a week in central banking makes. From worrying about markets and China to virtually sealing the deal for a 2015 hike, the old girl is full of surprises
First and foremost we obviously wish her well. At nearly 70 most people have, or are looking to slow down and enjoy the latter years of their life, not run bloody central banks. I hope that this was just a case of overdoing it and not something more serious
After reading back over her comments and looking at the price move one thing is pretty clear. It looks like the rate trade is very much priced in. For me, her comments couldn't have been clearer and if there was plenty of fuel left in the rate trade I would have expected to see more than the initial 30/40 pip move
Right now we're knocking on the upper part of the tech pattern the world and his mate have been watching. This is possibly going to be a great example of whether tech levels like this work or whether they get ignored
USDJPY H4 chart
Firstly, let's take it in context. It's a short term pattern so it doesn't necessarily have too much strength. The fact that it's played out is probably more to do with where the price was at the time of certain events meaning that it became a natural stall point. If you traded it, it would have gained you some good pips. But all good things come to an end
As I type we've gone through by a few pips and it looks like 121.00 is having a bigger say than the top trend line. Whether the patter is good or not will be defined after a break and whether the level becomes support. I would want to see 121.00 taken out before a retest
What I'm also looking for is a reaction when the yanks come in. The States we're closed when Yellen's text his the screens so they've yet to pass judgment. If I had to make a call I would say that they take it up further (if it hasn't gone further already by the time they get in).
Through 121.00 we have resistance at 121.30 and then a pretty clear run to 122.00, though 121.65/70 is likely to pose resistance too. After 122.00 we have some interesting tech at 122.23-50 by way of the 55 & 100 dma's and an old S&R level
USDJPY daily chart
A long looks the low risk trade here if 121.00 breaks as stops can be placed below the trend line and 200 dma. If these levels hold before 121.000 goes then that would be a better entry point but I would still keep things tight
As I say, let's see how the US wants to take the latest news as it will be a big clue as to what's left in the Fed rate trade tank
Update: And as I hit send, we break up to 121.09 :-D