AUD,USDJPY & AUDJPY

Written by Research | 26 April 2010

Directional Trend Outlook

Interesting enough, where would the next probable market trade might be coming from? That is one of the key elements that we normally try and speculate on. Not that there is not enough volatility in the market place.

But the fact still remains thatthe upcoming senate hearing on Goldman Sachs will obviously be covered by the news overwhelmingly and may also have some indirect effect to the market USD movements indirectly.

The Greece situation will also be hoovering on the clouds directly affecting the Euro the next few weeks and the British Pound managing to benefit out of the situation managing to move higher on a slower pace. And the Fed meeting on rates to top it all.

Although, with the stock markets higher opening and encouraging trend higher as most of the better than expected earnings report from major companies have shown critical growth as stock market prices have moved higher providing some support from a slightly weaker USD from the previous week closing lower for the week ending April 23, 2010

Actually, the lower closing was a breather for the USD as it has been maintaining its levels above the 80 - 81.00 bp levels which happens to be still within its directional trend higher. While Gold prices also have sustained above the $1135.00 levels. This is where commodity prices on the precious metal have been in tandem with the direction of the USD since the start of the 1st quarter of the year on a bigger perspective.

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Meanwhile, looking at the extra ordinary price movement of the AUDUSD back to the 0.9300 and re-testing the 0.9320-80 price range may well be breaking on the next attempt higher and a lower corrective movement at the 0.9180-0.9220 inital support would come first prior to the next attempt higher. With the support from the AUDJPY that would be making significant new highs before the closing of the month of April currently at the 87.15 correction. Do expect some wider trading ranges as position adjustments comes with the 2nd quarter and closing of the month approaches. These price trading ranges would increase as volatility increases from the next Fed meeting reports and the senate hearings this week for Goldman Sachs not to mention the Greece negotiating with Germany.

This has been led primarily from the USDJPY rally that we have seen where the USDJPY is currently working at 94.24; as we have speculated on based from our video presentation on the USDJPY vs. AUDUSD Directional Trend dated April 05, 2010. However, time variable on trding activities may also change like the prices. So percentage trading with cushioning positions among the correlations of the currencies traded may well be a smarter move while trading the Forex market. Remember, that it can only help as trading through arbitrary hedging is an advantage though one may need to have the appropriate amount to trade if your use these kinds of strategies. A similar strategy does not guarantee that the same results can produce the smae kind of profit potential. A link to this video is attached herewith :

http://www.youtube.com/watch?v=CWW9ctnR5ts

The direction of both majors were anticipated at an earlier phase but the corrective move on the AUDUSD back down to the 0.9155 in the Asian session was the low where the pivotal point on a price reversal back to its trend was established after passing through the resistance levels of 0.9220 and closing above said price for the week ending 23rd of April.

While the USDJPY held its prices and moved higher currently working at the 94.24 area which was the initial target objective of the USDJPY after the 91.58 low and as to now it is at the higher price resistance. the fundamental reports on the Japanese Yen's more likely scenario that it would continue to weaken is the outstanding 200% debt ratio vs. its GDP as well reported on the Bloomberg news on Japan, its political uncertainty of handling this ratio by the Japanese government and without mentioning Japan's economic recovery while their workforce and population has also been declining will have a harder time to make it move faster. Now this would leave some room for rating agencies to downgrade Japan through the course of the year making the USDJPY to move higher from hereunto. the same scenario as a ladder-like manner for the USDJPY to move higher mid-term to longer term perspective.

Couple with the AUDJPY to do the same. For as long as the Aussie would hold its levels then this case scenario will be one of the major market trades that we would expect in the near term. As already evidenced showing some probable high in the making. There are major up and down swings that may not be as tolerated for small retail accounts which may trigger unexpectedly some stop loss orders. Tolerance levels should be carefully studied and understood as the market makes its way with more wider trading ranges and market swings within the three time zones.

Be extra careful of these price movements as major players may consider this case scenario in the mid-term. We just wanted to place this notice that it can happen along the way. some may agree or disagree with the analysis. But let it be known that this opinions and market views of the FX market is simply for informational purposes and education. There will always be the risk of loss trading the FX market so consider whether it is suitable for you or not. Consult your financial advisor.

Source of reports from Bloomberg News, Japan Economic Trade Report, Google and Yahoo Financial News
Good Luck and Best to your trades.