Asia Closing: USD/JPY unmoved despite sharp rallies in Asia

USD/JPY H1

USD/JPY was relatively muted during Asian hours despite risk correlated asset rallying, putting doubts in the sustainability of the rally we’ve observed in the other currencies/equities.  L3 of 77.65 acting as a short-term support while 77.75 which was the floor for most part of Tuesday and Wednesday is not acting as a potential ceiling. The nearby Channel Top may also act as a support should price attempt to break L3 during Europe Session/US open (which is in a few hours time). A break below L4 and Yesterday’s Low may encourage more bearish momentum towards Channel Bottom.

AUD/USD H1

A tweezers top look potentially to be formed at 1.0405 which is around the swing low back on 25th Sep. However, support could be seen between H3 and Yesterday’s High which is incidentally Monday’s low. Break below H3 will encourage selling towards L3 which is the consolidation range on Wednesday. With that in mind, downside potential may be limited as the top side of the consolidation range is around 1.037. Bears may wish to wait for a significant break below 1.037 to look for better risk/reward ratios for their trades.

NZD/USD H1

Potential double top forming. Setup will be negated should price close above high of 25th Sep. Based on current setup, selling momentum may pick up if we break below Yesterday’s high of 0.825.

Nikkei 225 Futures H1

Prices looking awfully similar to the European counterparts. Price rallied but is unable to push above yesterday’s highs and is around Monday’s low. This should ordinarily act as a bearish trend confirmation but becareful for any potential bullish news in the form of Spain requesting for bailout which will disrupt all bearish chart patterns.

Hang Seng Futures M15

Today’s price action demonstrate the limitation of using Camarilla lines. The benefit of Camarilla pivots is that we are able to look for potential intraday entries unlike standard pivot lines as Camarilla formulas plot out lines close to yesterday’s close. The flip side is that Camarilla will be rendered useless should there be extreme price movements (rally or sell offs beyond H5/L5) which happened today with HSI.

Although we have seen a sharp rally in HSI following China’s repo action, we are still not totally out of the woods with price closing just below Monday’s High. Should there be no significant development with Spain today or tomorrow, price may be locked between Monday’s High and Tuesday’s low, similar to price action that we’ve seen on Wednesday.

Bottomline:

Other than HSI, the rallies we’ve seen today does not change the overall bearish outlook. As mentioned in the Europe Open Commentary, market sentiment is led by issues with Spain. If we do not see any resolution for Spain in sight within the near future, any rallies will be met with significant resistance.

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