Updated on Oct 8 >> GPBJPY Retracement and Bullish Set Up (Oct 1)
Original trade plan:
With Carney hawkish on inflation, and Kuroda neutral and waiting, I’m looking for a Tankan fueled retracement due to the JPY being oversold (if you’re a bear) and then a Bullish entry at either the 148.30 area with a target of 159.80, or at an even stronger retracement to the 146.00 area with a
target of 157.50. Revised Oct 8 >>> Cautious target #1 at 152.50, and M3 (double top) and more aggressive target #2 at 155.00 R1 area. This pair has found resistance at a Mar 2016 pre Brexit support, and there is a decent head and shoulders reversal pattern already in place for you Bears. The JPY Tankan, and the GBP PMI, are up to bat shortly and will hopefully give us some direction.
Update #1 – Oct 1 (GMT-7) 6:30 PST >>> The Japanese Tankan came in mixed as far as expectations, but was still expansionary, however the Sep. UK Gfc consumer confidence has again slowed its contraction from -10 to -9. We still have the UK PMI coming up which could send the pair one way of the other.
Update #2 – Oct 8 (GMT-7) 6:00 PST >>> Last week there were some lower than expected UK Eco Data, including the PMI mentioned above. This combined with some “Hawkish” hints coming from JCB’s Nakaso, “Reasons to believe that ‘True Dawn’ is near, after Monetary Policies ‘False Dawns’.” I only caught this off the ticker, so I’m sure there is more to this statement….??? or not.
Anyway, I interpreted this statement as they will soon at least be discussing (or already are) their version of normalization. So, with that being said, its been my experience, that maybe not at first, but eventually what’s good for Japan’s economy, is bad for the Yen, and that’s good if you’re the JCB who like the yen a little weak.
These and other developments are helping this trade plan to set up nicely. Its sure has been a nice Bear run, eh? I grabbed a few reverse trend pips myself.
So at this point, its time to get serious about the possibility of Bullish reversal patterns on smaller time frames. The daily is oversold nicely, and its almost at my “Even stronger retracement area” mentioned above, so I’m going to look for smaller stoch’s to line up around the 146.00 area. This area is the late July, early Aug resistance (Daily) as well as a few days consolidation in mid Sep, and we all know how fast things were moving in September. Its also hopefully going to use the Monthly M2/Weekly S1 cluster, and 55 EMA as a spring board. Entry long around 146 or above, and revised target at 1st 152.50 (cautious), and 2nd around 155.00 (agressive)