Tuesday, 22 May 2012

USD/JPY completed 61.8% retracement and bullish momentum divergences warn to watch for upwards trend line break

The completed 61.8% retracement and bullish momentum (MACDH) divergences warn to watch for an upwards trend line break. I know last week's upwards trend line break didn't work out, but you've gotta play the current delivery, not the last one.




EUR/USD momentum at two different time frames indicates that lower prices are likely

Momentum at two different time frames indicates that lower prices are likely in the near term for the EUR/USD, and that the one year old down trend has further to go.

First chart is a weekly candlestick of trade since the 2008 top. If last week's trend line break ís not enough to suggest to you that lower prices are likely soon, note also that momentum (MACD) has flipped to negative. Every instance of negative momentum on this chart (and most in the more distant past) accompanied strong declines.


Next chart is a daily candlestick for the past 9 months or so. If the down trend was approaching an end it would be expected to show positive momentum divergences. The present case for the EUR/USD shows the opposite of that. The most recent MACDH trough was actually lower than the previous six troughs! This is the thumbprint of a kick-off move, suggesting that the down trend has renewed strength and has further to run.