EUR.JPY

[arco]

[peat]

shouldnt the target for this breakthrough be quite large given the length of the compression phase. I can see its pulled back now, but just wondering if this gives us a new chance to reenter....

[arco]

Hi Peat

Yes, it certainly looks that way.

As a matter of interest. Ichimoku Monthly gave a buy signal 4472 pips ago, and neither the daily, weekly or monthly Ichi charts show signs of a reversal signal as yet. Therefore a scaling in off the fib retracements might work.

regards - arco


A little light weekend reading..................

A farewell to zero by Hisane Masaki

TOKYO - The countdown has begun to the Japanese central bank's exit from years of ultra-loose, near-zero-interest-rate monetary policy, amid growing signs of a recovery taking root and chronic deflation finally releasing its grip on the world's second-largest economy.

The Bank of Japan's departure from its so-called "quantitative easing" policy, possibly as early as next week and probably by the end of April at the latest, is widely seen as a foregone conclusion. So the biggest questions now are: Exactly when will the BOJ make the move? And what will come next?

BOJ governor Toshihiko Fukui has suggested for a while that the end to the quantitative easing policy is coming soon. In his strongest signal to that effect, Fukui told an upper house committee of the diet, Japan's parliament, on last Thursday that he hopes "immediately" to end quantitative easing once the conditions for doing so are met.

Under the present policy, which was introduced in March 2001, the BOJ flooded Japanese financial markets with excess cash in the hope of encouraging lending, while anchoring short-term interest rates near zero. The BOJ has vowed that it will stick to the policy until deflation (a continuous decline in prices), which has long plagued the Japanese economy, is beaten. Deflation has acted as a drag on the economy by eroding corporate earnings and paychecks. Fukui, who took the BOJ helm in March 2003, has won the confidence of the markets largely by being seen as more firmly committed than his predecessor, Masaru Hayami, to quelling deflation.

The BOJ has set three conditions for ending the quantitative easing policy:
Year-on-year changes in the core consumer price index (CPI), which excludes volatile prices of fresh foods, must remain stable above zero.
BOJ board members must be convinced that deflation will not return.
There should be no other factors that warrant keeping the loose monetary settings in place.

The BOJ has not always done a stand-up job in fulfilling its mission. In August 2000, it announced an end to its zero-interest-rate policy, which had been in place since February 1999, and raised interest rates too early. This, coupled with the bursting of the information-technology bubble in the United States, plunged the Japanese economy back into recession. In the face of a barrage of criticism, the BOJ restored the zero-interest-rate policy and introduced the quantitative easing as a main tool to steer its monetary policy.

This time around, however, the BOJ is more confident of its policy shift. Concerns over Japanese financial institutions have eased significantly as the once-huge mountains of bad bank loans returned to normal levels. Major companies have cleared away the excess debts, equipment and labor that had weighed on their fortunes, and are expected to log record profits for the current fiscal year ending this month. The BOJ has been increasingly encouraged by recent upbeat economic data showing that Japan has finally emerged from the decade of stagnation that ensued after the "bubble economy" burst in the early 1990s.

Industrial output in 2005 posted its highest level since 2000. In a preliminary report on Tuesday, the government said industrial production rose a seasonally adjusted 0.3% in January from the previous month, the sixth straight monthly increase. The January output index stood at its highest level since 2000.

Unemployment declined for the third year in a row in 2005, to 4.4% from 4.7% in 2004, with the December figure down 0.2 percentage point from November's 4.6%. In December, the number of job offers and job seekers matched for the first time in more than 13 years. Amid the impr

[peat]

I'm not sure that article helps me go long Eur vs Yen , but at this stage thats what the graph looks like, so I'm in again at 151.22. Tight stop tho.
When JPY appreciation does come, after the fear of further deflation is defused it could be massive turnaround. Jyske bank have been talking about this for ages (and getting it wrong as they short these JPY crosses) but one day I suspect they will be right.

[arco]

Evening Peat

I try not to let outside influences affect my charting logic, otherwise I will be lost.

I always remember that old quote.

The market can stay irrational longer than you can stay solvent"

- Keynes

e.g. Whats to stop EuroYen going to 155?

Anyway, the answer for me is always the chart. If I base my decisions off that one thing I can work on a logical trading system with set rules.

The chart rules - long live the chart.

Have a great weekend

arco

[arco]

Spotted this...not that it makes any difference in a charting sense, but its interesting none the less.

Asked about carry trades, in which investors borrow cheaply in yen and use the funds to invest in higher-yielding currencies, Fukui said the BOJ was cautious about the risk of a sharp unwinding of the trades when the market's expectations of interest rates change.
He said the yen's low interest rates are helping to swell the carry trade and his staff is still trying to determine how big the phenomenon has grown.
"If the size is very big and expectations for (global) interest rate movements change suddenly, there are substantial risks of a sharp unwinding that could cause various distortions, so we are watching this with vigilance," Fukui said. "We need to communicate with markets to make sure they don't find our monetary policy a surprise."
The yen carry trade has been cited as a factor behind the yen's recent weakness, as players sell their borrowed yen to buy other currencies.
The yen edged slightly higher against the dollar and the euro after Fukui's comments on the carry trade, which came as the Japanese currency was trading near a record low against the euro.

[miner]

Hi Peat

As Arco says often best just to do your own thing,as for me if I read what other people think it just puts there thoughts numbers in my head,I could be reading FXCM's charting picks but don't as my system works well so just stick to it and do what my system tells me.

Like eur/jpy will probably be a long again but on Friday my system said sit on your hands if looking for a long as it was way to messy,so wait for it to get it's act together then it "may" look like a nice tidy "easy" long.

What I have changed lately though is I am now more patient,as in I just wait for the right entry,if I try and push a trade it goes to custard,so just wait for the right trade for my system,a + with this is I can run very small stops,but when I get it wrong I and know it I just jump,NO emotion is a big part of getting it right.



Just some thoughts that I thought might help,good luck with your trading.

Cheers
Miner

[peat]

Yes theres good and bad with other peoples opinions whether it be macro economic perspectives or specific trades. I'm staying away from global-view forum at the moment as it mucks with my head all those viewpoints. After all the ultimate goal is to be able to read the charts independently.

I just thought I would comment too, that I was watching Eur/Jpy towards the close on Sat morning (our time) and the volatility was amazing!! Jumping around by 10 pips or more at a time over the course of seconds , up and down again and again. Kinda wondered whether it would be possible to trade that.

I'm holding my long on this pair.... so I'm quite long on the Euro overall as am holding long Eur/Gbp as well. We've had a correction on that one and now the flag is forming, which way will it break?

[miner]

Hi Peat for me when it is jumping around it is too dodgy,why play when you can wait and do a safer trade,as when it is messy you just get taken out,I look for turn signals and for them to test previous high lows(look at usd/jpy,usd/chf and eur/usd today).

Am watching for eur/jpy to turn north on 150.74(look at daily) but in saying that don't get it stuck in my head.

Allot of my system is picking the turns,so start of runs big or small and often trade one pair by watching another,eg usd/jpy led usd/chf and eur/usd today,2 south one north.

I use the KISS method.

Cheers
Miner

[peat]

The Reserve Bank has joined other central banks in buying Japanese yen...

http://www.nzherald.co.nz/section/st...ectid=10410565

(another article not supporting my current positions haha)