First off, I’m experimenting with dictating my analysis instead of typing it out each morning to save time. So I spent some time, maybe more than I should have, messing with this microphone and the recording/dictating applications. That’s the downside. But on the bright side: It’s not quite 9:00, I’ve got coffee, taken care of my morning routine, and I’m ready to dive in.
I’ve got all my pairs listed and sorted by volume. It looks like some of the highest volume today is in yen pairs, and wow does it look… extended? Over-moved? I mean, I don’t know exactly what to say, but wild action here.
GBP/JPY – Neutral
Pound-Yen is first. There was a huge spike overnight and it looks like it’s already kind of pulling back a bit. I could maybe argue a bullish pullback or maybe a retest on the two hour chart, but it’s not something I don’t think I’m comfortable taking long.
On the 2 hour chart, it’s riding the upper band hard. It’s blown through the upper band over the last 5 candles, and the faster RSI line has pushed into overbought territory. The slower one hasn’t quite gotten there yet, though.
Dropping down to the five minute chart for entries, maybe I could see some more upside here. At least to the highs that it made earlier today. But. I’m very hesitant there. I think I’m going to hold off.
EUR/JPY – Neutral
Euro-JPY is next and it looks a lot like Pound-Yen. Huge spike starting at basically the end of the day yesterday going into midnight last night. There were outsized spikes 8 hours in a row, followed by a bit of a pullback over the last four hours. But it’s made such a strong up move that it looks exhausted even with this pullback.
I’m not sure it’s a good idea to take this long here. Especially with a mean reversion outlook, I’d expect this to revert back to the mean in the near future, so these might be a little too extended for my taste right now. I’ll hold off for now and revisit if I don’t see anything else I like.
GBP/AUD – Long
Pound-Aussie appears to officially be in a downtrend now. Starting about a week ago it made a strong drop, then had a fairly strong rally after that for about a day; but didn’t quite get up to the prior highs. It’s been steadily pushing down since. That said, over the last day or so, this has been pushing up a little bit. I see a little bit of a higher high, a higher low, then another higher high.
I could see a reverse head and shoulders pattern here. There’s a key area from back on the 27th that was created during this downtrend that price has just pushed up above, and is maybe retesting. RSI is pushing up, the faster line has just pushed up above 50 and the slower line is starting to curve up. We’re not quite to the upper band yet and the bands are starting to expand. Maybe, in this short term, there’s a bit of bullish opportunity here.
USD/JPY – Neutral
Again, the Yen pairs have just rocketed up for some reason, to the point where they look extended. I don’t know how I’d reasonably trade this. On the five minute chart, the RSI is showing everything in overbought levels and has been above 70 level all morning.
Since the huge spike around midnight, like every other JPY pair, this has been extremely overbought and has been riding the upper band. There’s a ton of strength here, so it feels weird sitting out. But at the same time, I’m trading, not just looking for strength. I need to know my exits, my targets and my R:R, so I think I just have to leave it alone. Doesn’t make me happy, but here we are.
AUD/JPY – Neutral/Long
This one looks a little bit better than the other Yen pairs. The push up was extended similar to the Pound-Yen and Euro-Yen, but not quite as extended as Dollar-Yen. I will say that the price that was reached this morning on the huge spike is at a level that’s been resistance going all the way back to late September/early October.
Because of that it’s hard just make a call that that’s going to make another strong push up. That resistance is very strong. This is the fourth time it’s tested it over the last month, and this time it actually broke through and made a fairly significant push above that resistance area. That said, it’s already pulled back and is back hovering around that key area again.
I’ll hold off here for now, but of the JPY pairs, I think this is my favorite one. So, if I’m going to trade a Yen Cross it might be here.
EUR/AUD – Long
Euro-Aussie has been kind of wild. Starting late September, I’d say this is definitely trending upward. I’m on a daily chart now, which admittedly is a little zoomed out if I want to trade the 5/15 minute charts, but that’s where I’m starting. Price reached a high back on the 24th, pulled back from there, made a higher low. It kind of trended down a little bit from there then bottomed out. Once it bottomed out, price made more higher lows and today is pushing up again. Price has pushed up against the resistance area that’s in the middle of this uptrend that it’s been in, but RSI is just above 50. It’s also in the middle of the Bollinger Bands and the bands are expanding.
On the two hour chart, it looks like price is riding the upper band and RSI is closer to overbought but not quite in overbought levels. I’m also seeing a bit of a base on the two hour chart. Dropping down to the 5 minute chart I’m just seeing range-bound trading, which strengthens the base pattern on the 2 hour chart. So I think I’m going to trade this base on the two hour chart and just understand that it’s a longer term play.
NZD/JPY – Long
Kiwi’s strong spike this morning, unlike the rest, has pulled back already. Price pushed up to within a strong key area, but dropped from there. So, if this makes another push up, it could create a long trading opportunity. The current candle has a long lower wick and a small body at the upper range of the Wick, so it does look like there’s strength returning or maintaining in this pair.
This is moving as I’m talking through this, and if it makes another break up it could reach the 88.5 level. So, it’s just a matter of whether there’s a good entry and stop point that gives a good risk reward. The pullback is deeper on the five minute chart, but I don’t think that’s a terrible thing.
I guess I do want a little more confirmation that this is in fact going to continue to the upside, and not stall at this next key area. So I’d like to see this break through it and then maybe retest before I get in. I like this long, so I’m going to mark it on my chart to keep an eye on it, but I’m not going to look for entries yet.
EUR/CAD – Neutral
I Accidentally looked at Euro-CAD on the five minute chart and it does not look good. The 2 hour chart is showing some decent spikes; but those spikes are followed by long periods of inactivity. And the spikes themselves happen at seemingly random intervals. I’m sure there’s a news event, or some sort of catalyst that causes them, but from a pure price action perspective, they look random.
This morning, price made another one of those spikes, pushing up starting at about 2:00 AM. From there, it made a relatively big spike up, but then around 6:00 AM, pulled back too about half of the gains it made overnight. The current candle appears to be trying to regain some strength, but Price pushed well into overbought territory and is riding the upper band and that disqualifies this in my strategy.
What did you think of today’s analysis? Let me know in the comments if it helped you. Or, if you saw something different, leave that in the comments, too. Thanks for reading, and stay tuned for more market analysis and Forex trades!