USDJPY FX - Update.

The USDJPY failed to follow through on the reaction to the downgrade last week, moving pretty swiftly back to the low 82s. As I  like to point out, there are always 2 main directional options (There are 3 actually; up , down , and sideways range, plus the many combination/permutations of these beyond and within that).
The failure to push any higher shows the strength of the overhanging resistance in the 83/84 area, and the strong influence of the down-trend of the past 3 1/2 years.  I still think we may be in a basing phase, but until and unless 83/84 is properly broken on a sustainable basis, with at least a move over 85, further downside is still a distinct possibility. The chart below shows how the price action of the past 3 months may have formed a 'Bearish Triangle' which could target 77/78. The other option is that the pair stays in a continued sideways action for now largely between 81/84 as opposing forces negate each-other.

USDJPY FX - POSSIBLE INVERTED 'HEAD AND SHOULDERS'.

Today's downgrade by S&P on Japan could be the catalyst for the completion of a Major Inverse Head & Shoulders pattern, which could see a rally in USDJPY towards high 80s as a minimum. - the key is a successful break of 83.70/80.  See chart below:  - Though it may not be significant for stocks, in this highly correlated world it may co-inside with some profit-taking on the major indices.

EURUSD - A long-term very possible bullish resolution.

This morning I would like to take a look at the Long-Term EURUSD chart. I can not help remain surprised by the recent relative out-performance of the Euro versus the USD. When one considers the amount and weight of negative Euro sentiment in recent months, the current level versus the USD is surprisingly strong [Currently 1.3570]. Overall it is sitting pretty much in the middle of its range for the last three years, and close to levels from mid-2007 when the pre-crash asset price bubble was hurtling towards it final spell of strength.

Looking at the long-term monthly chart, I can not help thinking that price action since the top in 2008 has unfolded in what may appear to be a pattern which typically has a strong bullish resolution. The pattern I am potentially seeing is a very large Falling Wedge pattern (Though it could also be described as a downward sloping Bull Flag.) . Last year I wrote a piece about 'Falling Wedge' patterns, which can be seen here. In that article I was referring to the mid-year wedge on the SP500 as a potential Type 2 Falling Wedge pattern, which typically has a strong bullish resolution, since then as we know the SP500 has soared. If I have correctly identified this as a potential falling wedge pattern, then I too favour it to be a Type 2 pattern. - Of course I always add that at any one time prices always have at least 2 possible paths, and it may equally be that we are unfolding in a large ranging downward channel. However, for now I will lean towards the formation of the possible Falling Wedge pattern. - In saying that, thus far it has not broken any resistance levels, which reside around 1.4000-1.4200, and a clean break over those levels will be needed to tip the odds more strongly in favour of an ultimate long-term Bullish resolution. - The chart below shows the Long-term Monthly Euro chart.

For very short-term traders, a chart on this time frame is clearly of little real use, however for slightly longer term traders, then this might be noteworthy in forming a backdrop relating to the bigger picture.

First update for a while.

Its been a while since I've posted. However, though not on a daily basis I am going to try and make an effort to say some thoughts at least on a Bi-weekly basis.

EURAUD

Possibly the most overcrowded trade in the world. IS everyone rushing for the exits at the same time ??

Just some food for thought.: This may be interesting if it develops a major correction, as this has inversely corresponded well with the SP500 over the past couple of years. - [See Below]. - I will say no more for now, but it will be interesting to see how this develops (if at all).