Dollar/Yen Sell Issued at 96.85 As Familiar Correlations Return
Posted by KavinLOOKING TO SELL DOLLAR/YEN AT 96.85 ON MONDAY
After breaking away for much of last week, familiar risk aversion correlations fell back in line on Friday and have continued into Monday thus far, with the Yen rallying (Dollar/Yen lower) in the face of an escalation in fear on more troubles within the banking sector. HSBC has now come under pressure on news of significant losses and a need to shore up their balance sheet.
The resulting price action has seen broad based liquidation on the yen crosses as money once again flows from the higher yielders back into the lower yielders. We would expect to see this pattern continue into the US session and will look to take advantage of what we believe to be an undervalued Yen at current levels (at least in the short-term).
The resulting price action has seen broad based liquidation on the yen crosses as money once again flows from the higher yielders back into the lower yielders. We would expect to see this pattern continue into the US session and will look to take advantage of what we believe to be an undervalued Yen at current levels (at least in the short-term).
Techs – Price action is starting to look bearish and could be warning of a short-term top. After rallying sharply for four consecutive days, the market finally stalled out on Friday, unable to post a fresh higher high above Thursday’s high, and subsequently breaking back below Thursday’s low. This set up a bearish reversal day that could open the door to a more significant drop over the coming days. The overbought daily RSI is also just rolling back over in favor of a much needed and healthy correction. Look for a break below Friday’s low to confirm and open deeper setbacks towards the former resistance now turned support at 94.60. Strategy: SELL @96.85 FOR A 94.60 OBJECTIVE, STOP @98.05. Stops to be trailed to cost on a break back below 96.35
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