There was a variation on a value indecision trade in USD/JPY yesterday morning. It pipped up just before release then crash/gapped down. This is why one needed to ride this market. The problem is those jobs figures are pretty good, from a fundamentalist view !
But the market is so much a money flow phenomenon, the hint of negativity was enough to send the flood of cash into JPY (as I suggested would happen), meaning they were bad figures for money flow, which is much more sensitive than valuations based on company growth. On the USD/JPY 4h there was a little bounce in the making, stopped yesterday. But on the USD/JPY 30 min what happened makes more sense from a chart pattern perspective.
This is a further detail of this kind of analysis, look for space for the programs to move but as well look for chart patterns they can move to. However the valuation down is far too overdone, note the gap upwards in USD/JPY 15 min yesterday afternoon. But it it not overdone on a money flow calculation.
The battle between recovery and carry trade continues...expect a reversal upwards when the sensitivity to money flow abates. This is a program induced sensitivity, and we have seen it wreak havok in the markets in recent weeks. Time a lack of news shocks and recovery signs abate it.
Another way to see whether this sensitivity is abating, is whether market make order flow is reversing it. This means sustained bounces at '00' levels for example. This is a powerful counter force and usually only news events or huge equity triggered money flows stop this.
What do I mean by a sustained bounce ? Typically a bounce will go from +15 to -15 around '00'. If it gets back above +25 for example it is looking sustained. If it is a true reversal it will go much further of course, but will tend to run into resistance around .50, no matter what. Check as well at higher time frames to see if the pattern makes sense as a continuation, reversal, or indecision candle pattern.
© 2010 Guy Barry - All Rights Reserved.
