This post was written on Thursday. It didn’t get posted because server on which this website is hosted went down. Service was restored very recently. All the charts are from Thursday. Not too big of a loss, since not much of interest happened on Friday.

Yesterday, currency markets, the Euro in particular, were spooked on rumors that China was reviewing its foreign reserves holding. It was feared that the  State Administration of Foreign Exchange (SAFE) would start unloading EUR. Well, just as I mentioned in last post, this speculation is similar to “dump the dollar” news from couple of years ago. Today Chines authorities affirmed their commitment to investing in Europe, calming the markets. For now at least. Should the common currency keep falling, these rumors will return and with increased frequency.

Over all the Euro had a good day, together with other currencies that were depressed lately. The commodity dollars enjoyed a nice rally, breaking out of the congestion zones discussed yesterday. Since for the most part I’ve been covering the Yen crosses here, I’m going to stay with them. For the AUD-JPY upside breakout level was 76.00, just above the highs from last week and few days ago. While the width of the consolidation zone suggested that upside move could be as large as 200 pips, my own objective was much smaller, 100 pips. I have not had much trust in this rally, hence smaller target.

With entry at 76.00, the 100 pips objective was achieved fast. Price still went  higher later, but I didn’t trade any more. At this point, it doesn’t look like there is too much room on the upside. I would like to see couple minor highs and lows develop, before more trades are placed. More about it later.

Another trade covered yesterday was in GBP-USD. The idea was to go either long, or short, on a breakout out of consolidation band. Price went up and trade was on at 1.4535. I changed my mind about staying in it for some time. No really fast movement, resistance at 100 SMA on 4H chart and I don’t feel comfortable about it any more. So, trade was closed at 1.4579 for 34 pips gain.

Back to the Yen pairs. For me to get into more trades here, I need to see some indecision, a little whipsaw action, which would create entry points for possible trades. As things are right now, the bullish moves maybe just about over, with the proximity of 100 SMA on 4H charts. That would mean possible reversals. Instead of selling blindly here, I’m going to wait and see how the price behaves. Once more data is available, it will be easier to decide which way to trade. For the moment it is a waiting game.

Mike K.