Back
5 Mar 2014
Flash: Overstretched indicator readings in yen crosses - FXStreet
FXStreet (Barcelona) - Goncalo Moreira CMT, FXStreet Technical Analyst notes that the The potential trend changes envisioned last week in the FX Bullish Percentage Index indicator materialized in the Japanese yen with a 95% reading on Monday.
Key Quotes
“(However) the bullish message was rapidly reversed with a plunge to 10% yesterday. Traditional breadth analysis tells us the strongest signal that a bullish trend has ended is when it breaks below 70%, then breaks 50% and then 30% without much interruption.”
“The other three major currencies in observation kept hugging the 50% level in the index, reinforcing last week's point of view of a sideways moving market. The near term outlook for these currencies will hinge on tomorrow's data releases (link calendar filtered).”
“Back to the yen, overstretched indicator readings in yen crosses offer the possibility to capitalize on short-term supply demand imbalances. Specially against the Australian dollar or the New Zealand dollar where impressive 180-160 pip rallies are being mustered, fading these markets with the expectation of a 38.2% to 50% correction emerges as a decent trade idea.”
Key Quotes
“(However) the bullish message was rapidly reversed with a plunge to 10% yesterday. Traditional breadth analysis tells us the strongest signal that a bullish trend has ended is when it breaks below 70%, then breaks 50% and then 30% without much interruption.”
“The other three major currencies in observation kept hugging the 50% level in the index, reinforcing last week's point of view of a sideways moving market. The near term outlook for these currencies will hinge on tomorrow's data releases (link calendar filtered).”
“Back to the yen, overstretched indicator readings in yen crosses offer the possibility to capitalize on short-term supply demand imbalances. Specially against the Australian dollar or the New Zealand dollar where impressive 180-160 pip rallies are being mustered, fading these markets with the expectation of a 38.2% to 50% correction emerges as a decent trade idea.”