10/31 Forex

Notes on this morning’s forex...

Everything/JPY up sharply after the Japanese government announces intervention to devalue the yen.

USD/JPY rose intraday by 5.2% at its peak, although it has since backed off to a 3.3% rise. The move pushed the price above its 20-day high and broke out of a sideways range in effect since early August.

The EUR/JPY move was more moderate (although still sharp): Up 4.2% intraday, with a pullback to 2.1%.

This is USD/JPY’s first push above the 20-day high since March 31.

The last yen intervention was Aug. 4. It pushed USD/JPY up 4.2% intraday, followed by a pullback to 2.5%. Subsequently, the price declined over three days to a sideways trend at the pre-intervention level.

The August intervention followed by two days a low of ¥76.30, and the Oct. 31 intervention came on a low of ¥75.572.

Looked at another way, the Bank of Japan saw five days of lower lows prior to the October intervention, and 12 days of lower lows prior to the August intervention.

Prior interventions to support the yen: March 1, 2011; Sept. 15, 2010; and before that, nothing for six years.

Every intervention (except, of course, for today’s, so far) has been followed, sometimes within days, by a pullback to lower levels, raising the question in my mind: Why bother?

What I Track

For the daily charts, I track approximately 120 currency pairs. For the hourlies, I track the dozen most important pairs, with two NOK pairs added in, because of their energy sector connection.

The majors, in declining importance, are EUR/USD, AUD/JPY, USD/CAD, AUD/USD, USD/CHF, USD/JPY, GBP/USD, NZD/USD, EUR/GBP, EUR/CHF, GBP/JPY, GBP/CHF, USD/NOK and EUR/NOK.

Key

• phase: 20-day price channel phase, with green for bull trend, red for bear trend and yellow for neutral trend.
• trend: Price direction, green for higher highs and higher lows, red for lower highs and lower lows, yellow for neither.
• adx: Average directional index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 25 and up but below 40, magenta (light purple) for 20 and up but below 25, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, magenta for sunset on the horizon and brown for the earth.)
• 200/50: The moving average cross, green for the 50-day ma above the 200, red for below and yellow for closely aligned.
• 40/10: The moving average cross, green for the 10-day ma above the 40, red for below and yellow for closely aligned.

About my trading methods

Read a detailed explanation of my analysis method, including trading rules.

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

The trader’s greatest sin is inaction. Sleeper, awake! Seize the Nietzchean moment. Roll out of bed and trade.