7 Oct 2010 Daily update: Further bearish moves, price breaching lower edge of long term channel.
Waiting for new daily bearish candle / short term rally to sell although right now this pair just keeps on dropping. MA10 getting lower and lower, signalling that the channel may be about to alter slightly and pushing price into a steeper dive.
MACD still well below zero line and still pointing down.
7 Oct 2010 daily update:
New daily + confluence on 4h.
Price still respecting former resistance zone as new support zone after dropping out of sideways range. Price now entering territory at which BoJ intervened recently so there is danger of that reoccuring.
Tempted to trade todays new daily candles with a nice 4h as confluence confirmation. 4h candle puts TP at 82.35. Daily puts TP at 81.44. I would like to be around to see things unfold today but cannot due to my pain in the behind day job. What I would be looking for (my opinion / approach/ speculation only!) is proof that the price move downwards is strong enough to breach both the new support and former resistance levels, currently at 82.68 and 82.40 respectively.
'Proof' would be a close below these levels on the higher timeframes, say 1h or even 4h. Then a nice bearish candle could get price sailing down to 81.44 for around 100-ish pips. There is a risk of BoJ jumping in again, which is why I would want to be around monitoring news etc if I were to take this trade. Will be interesting tomorrow to see what unfolds today on this pair as I am expecting price to jump down today but am unsure how BoJ will view this. Who said finance was boring? This is better than any soap opera!
8:22 GMT - UPDATE FROM BBC NEWS REPORTING THAT BoJ CUT INTERESTS RATES TO ALMOST ZERO TWO DAYS AGO AND IS CONTEMPLATING FURTHER ALTERNATIVE INTERVENTIONS IN ORDER TO WEAKNE THE YEN AGAINST OTHER CURRENCIES
Japan cuts interest rate further
Japan's central bank has cut its benchmark interest rate to almost zero as it tries to stimulate the county's faltering economy.
Rates had been held at 0.1% since the end of 2008, but have now been trimmed further.
Falling prices and the strong yen - which eats into the value of overseas earnings for Japanese exporters - have hit the economy.
A "near-zero" policy means that the rate moves within a small range between 0% and 0.1% - though no fixed rate is set.
"Although Japan's economy still shows signs of moderate recovery, the pace of recovery is slowing down partly due to the slowdown in overseas economies and the effects of the yen's appreciation on business sentiment," the Bank of Japan said.
Markets had not been expecting the rate cut.
"It was an utterly surprising and bold move. The bank has sent a favourable message to the markets, which had been expecting it to take only small, gradual steps," said Sieji Shiraishi at HSBC Securities.
He did, however, question the impact the rate cut would have.
"The bank's move is unlikely to impact the overall economy much, even though the yen weakened briefly, as the root of the problems lies in the weakness of the US economy."
The bank also said it would consider pumping money into the economy in an attempt to stimulate demand.