Tuesday, 29 May 2012

USD/JPY looks set for another crack at a bullish trend line break on the daily chart

On the weekend I posted some long-term USD/JPY charts showing the bullish big picture, certainly bullish while this month's low holds. Given that context, it is worth watching the nearby overhead trend line on the following daily chart. I have re-drawn the trend line slightly since the weekend's post, not that it matters much, as trend lines are more of a zone, certainly not precise tools. Momentum remains positive, following multiple bullish divergences ahead of this month's low.

Zooming right in to the hourly chart, we see a repeating trend line angle, plus one of my favourite set-ups, a triple moving average cross over, in this case bullish (sorry - you will need a magnifying glass - but it happened earlier today). I like these crossovers at any time frame, on any market, as they provide low risk entries and often enough are followed by strong moves. Low risk in the sense of "not much lost if stopped out", not "high probability of being a winning trade" - is there such a thing as the latter?

AUD/USD still trending down, so expect new lows in coming days

The daily chart shows that the AUD/USD is still trending down, trading below the trend channel that contained price action from early March to mid-May.  An early signal of a bottom would be a rally upwards through the lower trend line, which has not yet even been tested. Note that today the market rebounded lower from the 18 day moving average, a moving average that has acted as both support and resistance at different times so far this year.

The hourly chart is showing a repeating trend line angle over the past three weeks or so, and today's high met resistance at the second lowest line. A break below the lowest line would indicate that the market is headed for a test of the recent lows.