July 8, Forex Market Recap

For Japanese yen, Tuesday (7/7/2009) was an inside day (ID) with a daily range of 75-pip. Since last Friday (7/3/2009) was a holiday, which qualify Tuesday as a narrow range day (NR7).

Yen broke Tuesday's lower boundary in Asian session, which put yen in a very bearish mood, since it's a NR7/ID breakdown. Yen formed a small range and remained below yesterday's low for the whole London session and early US session. The downside follow through happened around 11:00am, which was decisive and dropped 233-pip in two hours, that is 7.3 s.d. out of average daily range. The bears are laughing all the way to the bank. There is an instant 150-pip rally after yen hit the bottom of a downward channel on daily charts.

On daily point and figure charts, there is a double bottom breakdown at 94.00. Look at hourly PnF, there is a double bottom breakdown on July 5 at 95.50, the downward momentum continued and broke support at 95.00 and 94.00 on July 6, and July 8 individually.

So the forex strategies for narrow range and inside day is to follow which direction the market is leading and prepare for a trending day. There is no need to predict direction or put personal bias on the market.