When Policy Makers Vomit

Ah the yen. In a previous capacity, The Wolf dissected the BOJ’s fruitless attempts to reflate the Japanese economy. It has been pushing on a string, up against the zero bound since shortly after 1993. And to what avail? Well, as central banks go, it’s done well. Prices have been stable, and unemployment has been low. Of course, GDP has been flat for 20 years, but anyone notice that growing GDP isn’t in ANY central bank’s charter?

Anyhow, look for the BOJ to go negative-er, or expand QE, or helicopter money, or related nonsense, now that USDJPY is back in the range where it did its “Halloween surprise” back in 2014.

USDJPY

USDJPY
BOJ to the Rescue?

While RSI suggests any bounce will be corrective, the risk reward seems unfavorable now for the bears. On a bounce into the trendline perhaps it’s better, but I’ll stand aside and await the proclamation from the “mighty” BOJ. Make no mistake, it’ll begin to sell yen in some form, and we’d like to be on that side of things when it comes.

EURUSD

EURUSD
Topping

Little change. Prices did push into a top, but the turn down isn’t conclusive yet. We’re thinking a top is going to form, and that the next big move is down, but there’s little reason to step in front of this yet. Be patient.

GBPUSD

GBPUSD
Get Bearish on a Bounce

We have a three wave advance from the low that failed at structural and trendline resistance. With the up trendline having given way, along with our bearish RSI profile, allow for a bounce to be contained. We’re bearish against the wave 2 high, although it we’d prefer to see prices remain below the 1.4250 area.

AUDUSD

AUDUSD
Topping

Aussie is in a similar spot as EURUSD. The next big move is likely lower, but we can’t rule out one more diverging push higher. But, the bearish divergence, from below Sustainable Bull territory, after the Sustainable Bear reading with no divergence, leaves our RSI profile as quite bearish. A break of the important horizontal red structural level .7385 would cement the bearish view.

NZDUSD

NZDUSD
Topping

We couldn’t argue with an immediately bearish view here either. In fact, bearish against Thursday’s high is an acceptable near term aggressively bearish take. That said, one more spike high with a quick reversal wouldn’t surprise us. Here again, though, the next big move is likely lower. Our guess is that something bearish out of China is coming.

USDCAD

USDCAD
Corrective Rally Up From Low

If wave B has started, it has done so in three waves. That means a flat or triangle. Of course, that could also mean one more probe lower to complete wave A. But, we’re at huge support, so any new low should be a marginal one. That said, a flat correction may only return to the 1.3200 area, not exactly impressive potential. I’ll take a pass here.

Happy Trading!

The Wolf

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About The Wolf

Twenty years is a long time to be involved in the trading business. Through many battles in every asset class known to man, knowledge has been gained; and, this project is a way to share that knowledge.
The Wolf is a big fan of repeatable market work, or the creation of a “process.”

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