2020-06-23 • Updated
After devastating March and humiliating April, May’s recovery brought hopes, positivism, and optimism to the markets. We can see that the USD has been gaining value against the safe-haven JPY almost the entire month. There was a pause at stage 2 after a shaky upswing at stage 1, then stage 3 followed with a spectacular peak. That was observed in the stock market as well. But that, altogether, was just the first awakening after a lethargic March and April. Just like spring after winter. However, unlike natural seasons, the market mood is now in a retrace after the recovery hopes brought it up from the ruining silence. Stage 4 was an introduction to that retrace, which undid almost all gains of May. The good news is, it landed higher than May lows – that gives a hint that the recovery is indeed underway, but it will not be a straight line upwards. Currently, we are in stage 5 – a sideways movement that changes baseline levels from time to time. Let’s see it closer.
From June 11 till June 18, the USD has been trading within channel 1 between 107.20 and 107.50 against the JPY. Then, it moved downwards to go sideways within channel 2 between 106.75 and 107.00 until this Tuesday. Currently, it is in the middle zone between those two channels suggesting a potential for a new sideways channel 3. Although it doesn’t look like a single shot out of channel 2, we still need to time-confirm this shift. In any case, it is a good sign: it means there are lighter moods among investors who look to trade more risk-on compared to the previous week. If the fundamental balance stays neutral as it is now, we are likely to see USD/JPY move within this channel. If the information background – which is more unlikely – becomes more positive, we will see USD/JPY move into the zone of channel 1. Set your trades accordingly and watch the news.
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When I started trading stocks a few years ago, I often needed to pay more attention to my technical analysis skills and trust that the market would play fair according to my analysis. I have since discovered that the safer approach to trading stocks is to, more often than not, seek out investing opportunities - that is, catching stock commodities with a potential to rise.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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