Had a fairly slow and quiet trading day. Few minor trades followed by a break, taking care of some business. By contrast, press had anything but quiet day. Speculation about Yuan revaluation is reaching a fever pitch, Unfortunately, every single report contradicts the one published right before. Obama supposedly told his Chinese counterpart that Yuan was undervalued and apparently heard in return that yes, some re-balancing is needed. That was followed by news, (or rumors, who knows?), that China doesn’t plan such move any time soon. New reports quoted Geithner as being “confident” that changes will happen soon. Now, that’s a man of unshakable confidence. He’s been expressing it for, what, a year now? Still holding fast. We salute you!

Many more opinions were published today from economist and other such luminaries. They are all at best confusing. Interesting, though, has been the increased speculation about which other Asian currencies would benefit most from revaluation of Yuan. Some say Korean Won should gain most, while others prefer Indonesian Rupiah or Indian Rupee. Others still claim that Japanese Yen would be the biggest beneficiary. Lots of noise over nothing. At any rate, I don’t think JPY got the message, because it has been getting weaker all day, and still is.

Aussie-Yen dipped under latest low and reversed, about the time I was posting previous update. Selling on a run up to 86.50 was considered, depending on solid reversal pattern. Price indeed moved to 86.50, and paused, but without convincing sell signal. The black candle that formed is a variation of Harami. In itself, it is not a bad pattern, but must happen after well defined move. Here I had possible bearish Harami, but only after one bullish candle. That just is not convincing enough, so I let it go. If a similar formation showed up now, it would have more weight. I’m looking for a sell signal, but given how widely price has been moving, don’t want to get too attached to my opinion. The 87 area is not bad to go short, it has a couple of places to put manageable stops and provides decent target. Now a signal is needed.

If Yen starts getting stronger (big IF), other crosses could also provide nice sell entries. On 4H chart of CAD-JPY, that would be under support of 92-91.95. There is a possibility that recent swings in these pairs are simply a set up for a bullish continuation. For that prices have to make new highs. Until then, I’m trying few short trades. Perhaps Yen will find out that it is expected to appreciate and play ball…

Mike K.