The euro/yen is using a swish swan dive next weeks of consolidation between 120.five and 123.five. The weekly chart demonstrates two aid characteristics but they are a extended way down below the latest degree. This sets up a shorter aspect trade.
The to start with aid feature is around 114.five. The next is a little bit reduce around 113.five. These aid characteristics mirror the extended phrase framework of the market.
The defining feature of the euro/yen chart is the down-sloping buying and selling channel that begins in mid 2015. A channel is defined by parallel craze strains. A buying and selling band is defined by horizontal aid and resistance levels.
The higher edge of the channel acted as a resistance degree. The reduce edge of the channel acted as a aid degree. In June 2016 the euro/yen broke down below the reduce edge of the buying and selling channel and developed great aid around 113.five For months the euro/yen hovered around this degree, shifting sideways until eventually it re-entered the buying and selling channel. The Oct 2016 rally from 113.five was a rebound rally from aid and from the reduce degree of the buying and selling channel.
In an virtually mirror picture of the tumble down below the buying and selling channel the euro/yen moved above the higher edge of the buying and selling channel and developed a consolidation band between 120.five and 123.five. It truly is a rather pattern, but meaningless in buying and selling conditions so traders keep away from the temptation to draw conclusions from this mirror repetition.
An vital feature is the tumble down below extended-phrase historic aid around 120.five. The tumble has no rational chart aid characteristics until eventually it reaches the higher edge of the buying and selling channel presently around 114.five. The tumble might be as swift as the November 2016 to December rise. We use the ANTSYSS trade process to extract great returns from these extended phrase actions.
Historical aid around 113.five is consistent, but not essentially potent. When this degree was challenged in the center of 2016 the euro/yen dipped to as low as 109.five in advance of stabilizing around 113.five. Traders need to remain inform for these dips and sudden rebounds. It truly is great buying and selling territory.
Daryl Guppy is a trader and creator of Trend Buying and selling, The 36 Approaches of the Chinese for Economic Traders, which can be identified at www.guppytraders.com. He is a standard visitor on CNBC Asia Squawk Box. He is a speaker at buying and selling conferences in China, Asia, Australia and Europe. He is a unique marketing consultant to AxiCorp.