Weekly Forex Update: USD/JPY
The USD/JPY has stalled at the Falling Wedge pattern’s downtrend line resistance after the emergency meeting by the Bank of Japan (BOJ) failed to create the desired yen weakness. While the BOJ measures were intended to stop the yen’s advance against currencies worldwide, the announcement created nothing more than a quick bounce that traders sold into on the USD/JPY.
Meanwhile, the intraday rally has reached the Falling Wedge pattern’s downtrend line resistance on the daily time frame. This would normally initiate an Autochartist Reversal of the Trend (ART) entry long—however, because the rally was initiated by a piece of economic data rather than an organized trend higher, it merits a look at both the intraday trend and possible exhaustion levels.
The USD/JPY’s 240-minute chart rallied higher through a Channel Down pattern, triggering a reversal. The strong ten-bar Autochartist Breakout reading confirmed the bullish momentum behind the move higher, and prices easily reached 85.93 (F) at the lower end of the Autochartist Forecast area.
The exhaustion at the bottom of the Forecast range suggests that the move higher may be complete, and that the strong downtrend (confirmed by the eight-bar Initial Trend reading on the daily Falling Wedge pattern alert) will now continue lower after the intraday correction.
Weekly Forex Update: Silver
Silver has been moving higher as the bulls try to reach the trading range’s upper levels which have been in place since mid-June. The June highs at 1945 and 1927 have identified the ceiling with which the current push higher must contend. Most recently, Silver peaked near the top of the Autochartist Forecast area at 1935; the same Forecast area has identified a layer of resistance between 1879 and 1935 (F).
After breaking higher through the Falling Wedge pattern on the daily time frame at 1810 (E), Silver managed a volatile rally higher after overcoming resistance between 1858 and 1868. As prices begin to pull back in what is likely short-term profit taking, look for buyers to step in and support prices at 1900.
The intraday downtrend could be reversed if the bulls are able to push higher through downtrend line resistance at 1908.8 (X). This move would also trigger a pattern reversal of the 15-minute chart’s Channel Down pattern. Upside follow through may be limited however, due to the five-bar Autochartist Initial Trend reading which indicates a distribution market cycle. As distribution is characterized by volatile sideways price action expect exhaustion near 1915.
Weekly Forex Update: U.S. Russell 2000
The double bottom on the daily U.S. Russell 2000 at 587.67 (X) and 588.58 (Y) has established a floor for the bulls and has helped transition the index into a distribution cycle. This is confirmed by the four-bar Autochartist Initial Trend reading which indicates that the U.S. Russell 2000 is entering a volatile, sideways trading range. The top of the range is a dynamic level because it is a downtrend line. (Downtrend line resistance is currently waiting at 667.) The two prior highs also create a layer of resistance that could lead the index to exhaust between 677.15 (A) and 672.16 (B).
Distribution can be traded with the Autochartist Inside-the-Range (AIR) entry strategy in order to capitalize on exhaustion at the top and the bottom of the range as the index becomes overbought and oversold, respectively. Once prices are within the layer of resistance or support, a slower-moving Stochastic (e.g. 21-period) would be excellent confirmation of exhaustion.
Nearby previous highs (such as at 632.77 from August 18, 63277, and the August 23 high at 617.75) will present upside hurdles for the bounce higher; in fact, prices will initially be tested by Friday’s session high at 617.10.
Provided by www.autochartist.com
Disclaimer: Autochartist, MDIO Software, agents and resellers of Autochartist services do not guarantee the completeness, accuracy or timeliness of the information supplied. Users of this service should take independent decisions regarding any securities or financial instruments mentioned herein. Trading involves considerable risk: therefore, before trading you need carefully reflect on your risk appetite, investment objectives and level of experience. Do not invest money you cannot afford to lose. Past performance of strategies is not indicative of future performance.
Information and opinions contained contained in this article are for educational purposes only and do not constitute trading recommendations.
Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any.
