First, something little odd. The Abu Dhabi Investment Authority, one of world’s largest sovereign wealth funds (by some accounts the largest), partially lifted its veil of secrecy last week. The fund issued its first yearly statement. !t wasn’t very detailed, disclosing very limited information, byt could be a first step into more transparent future reports. Statement revealed that ADIA is mostly invested in equities from US and Europe. Size of the fund is not known, but believed to be between $400 – $800 billion, large enough that any portfolio re-balancing can easily move markets involved. In a strange twist, managing director of ADIA, Ahmed bin Zayed Al Nahyan’s, went missing this weekend, when his glider crushed into a lake in Morocco. Search is under way, though at this point it appears that he perished…

Japanese Yen came under pressure last week. All of JPY crosses moved higher, in many cases by hundreds of pips. By the end of the week, seemed that there was nothing moving the Yen, and pairs were responding to moves from other currencies. By Friday, CAD-JPY and AUD-JPY were falling, while EUR-JPY was still climbing. Couple of Yen pairs didn’t make any progress at all, but rather moved sideways, building congestion areas on short term charts. These were USD-JPY and GBP-JPY, and that is what interests me today.

Intermediate term chart of the beast is a little confusing. Price have been moving up since beginning of March. All swings were followed by deep pullbacks, but new high was made every time. Early last week latest low of 135.15 was taken out, possible first sign of trend turning around. This was followed by another move up, very typical or this kind of reversal. Currently price is around 138.00, which one would expect to be a level at which price turns down again and bearish trend is confirmed if it drops below latest low of 134.50 or so. Selling this cross now, and using this chart, would provide attractive risk reward ratio.

 I see some problems here, though. For one, 100 SMA has turned north in a very distinctive manner. Since it is fairly long term indicator, this (turning) doesn’t happen very often often and tends to be decent direction gauge. Also, no news moving the Yen itself is a little disturbing. Something will pup up soon, and all JPY pairs are likely to react in similar way, possibly overriding any one individual chart. With this in mind, I like shorter term graph better.

Hourly chart shows nice, well defined consolidation. Chances are that price will move out of it over next 1-2 days. This can provide good entry points for trades either way. On the upside, objective would be 100+, for a move reaching previous high from 4H chart. Should breakout happen to the downside, first target is 100 pips and then maybe even another 130 pips, previous low. I’m going to let market decide for me which way to trade. Few longer term transactions are still under way, which will be discussed as warranted. Also, just like every Sunday, I’m on the lookout for opening gaps, which have been abundant lately.
Mike K.