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.

July 1, 2009 Forex Market Recap

After the 8:15am event, British pound rallied until met resistance at pivot point (1.6543), and formed a symmetrical triangle pattern. For such pattern there is no need to predict the breakout direction, since both directions are possible. It turned out it's a breakdown.

Last night, euro formed a double bottom at yesterday's low 1.4001. The reversal signal was given at the beginning of London session after a breakout from the bottom range. After the breakout, the temporary dip found support at the top of the bottom range. A high probability long position entry was given when euro took a breakout from the symmetrical triangle. The rally reached euro's average daily range at 1.4164, which is right above yesterday's high 1.4152. There is a 70-pip spike in just 3 minutes (11:58-12:00pm).

Forex alerts for July 2, 2009
Yen was a NR7 today. Be prepared for a trending day.