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Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: EUR/USD
EUR/USD Strategy: Like the short side while below 1.3875.
Price & Time Analysis: NZD/USD
NZD/USD Strategy: Like the short side while below .8695.
Focus Chart of the Day: USD/JPY
USD/JPY seems to be at a critical inflection point. On Monday the exchange rate tested and held its 200-day moving average near 101.10. This was the first time since October/November of last year that the widely watched support level had been seen. Back then we were fairly confident that a test of the moving average would lead to an important rebound as it was the first time the 200-day MA had been tested since the major uptrend in USD/JPY had started in 2012. We have found that first time tests of the 200-day MA in major uptrends usually prove successful. This time around we are far from confident about any sort of meaningful rebound - in fact we fear the opposite. Long USD/JPY remains one of the favored macro themes at the institutional level. With the exchange rate having effectively gone nowhere over the past year (while other pro-risk markets like the SPX have gone gangbusters) there is likely a lot of "stale" positioning among this market segment. We can't help but wonder if a clear break of the 200-day MA over the next few days will be the technical trigger that forces a meaningful washout after a long period of going nowhere.
This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved