Howdy Folks,

First, thank you for being so patient with me and my stale blog while I wrote my book. I’m finishing it up now and getting back into the swing of things.  I appreciate everyone’s comments and suggestions as well. I’m really looking forward to having this work published. I will keep you updated on it’s progress.

Also, before I get started I want to mention I posted my thoughts on USD/CAD over on my FX Street blog. I invite you to read them by clicking here:

Tonight the USD/JPY is on my watch list for the next 48 hours. This pair staged a fantastic rally last week and given what happened in today’s equity market I think the risk averse crowd is itching for a reason to rally this again. Tonight we see USD/JPY floating just above what should become support from last week’s rally if the old axiom of resistance forming support proves true again with some trend indicators pointing to a move higher.

Fundamentally, the sentiment may shift to Dollar over the next 48 hours. Japan’s core machinery orders posted a horrible number tonight down 5.4% versus an expected 0.1% gain, ouch. Japan will also see GDP data tomorrow night (Wednesday in the U.S.) but that is the last of Japan’s fundamental punch for the week. Dollar on the other hand will see trade balance, retail sales and unemployment data over the next 48 hours with consumer sentiment on Friday.

Should the data continue a positive streak I expect to see another rally in the equity markets. Today’s market staged a vicious fourth quarter rally on mere commentary from Paul Krugman. Kathy Lien wrote in today’s FX360 column:

It seems that markets only needed one small catalyst to overturn bearish control. Today it came in the form of economist Paul Krugman’s comments that the economy is on pace to recovery, and should breach recessionary bounds by September. His comments reaffirm what everyone desperately wants to believe. However, today’s ending rise does mask some of the dour events that took place today. Today’s trading may present the new norm, as the masses of conflicting indicators manage to spike anxiety and volatility.

-Kathy Lien

http://www.fx360.com/commentary/kathy/1362/us-dollar-market-swings.aspx#headline04

I agree with Kathy. Assuming the news is consistently positive we may end the week higher on the equity side and Dollar may win out over the next 72 hours. From a technical perspective, the pair is testing a serious demand level built in from last week’s rally. Supply and demand traders will be watching the demand level between $97 and $97.50 for signs it will hold. Trending indicators including the Remora (modified HMA) that I watch and the bollinger bands suggest this pair may be starting a new up trend as well.

Here are today’s charts…

USD/JPY Daily

USD/JPY Daily (Remora)

USD/JPY 240

Best of luck, and more tomorrow! It’s good to be back!

Ryan

MPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors. It is quite possible you will lose all your risk capital on one or many really dumb trades if you don’t protect it with the appropriate risk measures. You could end up living in a van down by the river, and if you do it is not my fault you dig?