Nobody could be certain at this point, with politics influencing the markets so greatly, rather than economics.

Yes, I think it is possible the market has turned bullish overall. That is to say, a slight correction could happen, but it probably wont retest the lows.

Well ... we got a brief stab at the Jan top but so far not much more follow through. Feels like a correction is coming, but nothing steep. Its a good place to take profit and wait for a break, which will give the range traders opportunity to take it back to the low 93s. Maybe steeper. A 38.2% retrace wouldn't be shocking. That would take the pair down to the 92.60s (measuring from 89.70 to 94.43).

Looks to me, though, that a 50% retrace of the entire bear trend since last August is going to happen. That targets 98.87 ... At that point, we'll see have the market has developed in the meantime. Bad things can still happen in the US to mute further follow through. But it almost feels like the market is going to start ignoring US fundamentals because the rest of the world looks catestrophic. A reversal of how USDJPY has traditionally traded ...

Closed my short from yesterday at a very small profit. Was disappointed that this morning poke downwards stopped at 93.95. May retest 94.50 today, and if it gives, it will probably try 95/96 very soon. On the other hand, I hope a correction to 92/93 today.

Yeah, I heard alot of talk end of the day of buying at 94 and I was skeptical. Even strong rallies usually run out of steam and correct at this point. But not so far. I shorted a small lot at 94.40 yesterday and took profit at 94 after no more downside thus far. So I am just watching it. So far, that trend line from the January top and 93.95 is holding as support. Maybe Europe will punch it back up to 94.40s again from there.

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Why make 40 pips when you can make 400? Sometimes the best trade is to make a trade and stick with it. I got into this near 90 and am holding on. I hope you are right about 98. The fact that a long held relationship of the USDJPY to the stock market has failed makes me want to try to hold on to this trade for a while. Clearly the nations that have relied on the U.S. to sell their products are coming to the stark realization that the U.S. is not buying and their currencies are taking a hit. Things are not likely to improve as the U.S. government debt is crowding out the private sector. Car sales will remain slow and this will damage the JPY further.

AUDJPY getting ready to break its trend line.

Today is a classic demonstration of why I am primarily a short term book-profits-ask-questions-later trader. You can wake up, rub the sand out of your eyes, read some articles by analysts saying USDJPY is going to take out 94.60 and confirm a double bottom, and by the end of the day be looking at instead a double top that could mean a complete retrace of the rally.

Sunday night and Monday will be very telling. It could be this was just a 38.2% retrace (albeit an impulsive one), and we go back to testing 94.60. Or, we could head for a 61.8%, which lies at 91.50.

As far as the fundamentals go, I think what we've seen is rather US money being yanked out of Japanese markets en masse and perhaps also Japanese investors also buying US assets at the same time. US markets, though, are just as precarious as Japanese markets, so it's as likely as anything that the whole trend could reverse on itself. It's one big global Chinese fire drill.

As far as 98.87 goes, you shouldn't pin any hopes on my "instincts" -- every time i start talking about a significant rally in USDJPY, this happens. LOL

To me the chart looks to be filling the space between 91 and 94 There is a def rising trendline and neckline or pivot at 91. Remember how hard it was to punch up through 91.

The chart still looks bid and bullish till 91 is broken on the downside for a few hours

There will be considerable resistance at 94.4 but it will IMHO giveway.

Japans fundamentals are worse then the US and the tide has turned.

Maybe you missed this?

<<After tumbling by a record 35% in December, exports sank 46% from a year earlier during the first 20 days of January. In this environment, the jobless rate could climb to a high of 6% or so later this year, from 4.4% in December, economists say.>>

Steep Export Slide Pummels Japan - WSJ.com

This is a trend change IMO. The Obama "stimulus" plan will do nothing to stimulate U.S. consumption.

USDJPY

Here is three looks at this pair

On the ichimoku chart we can see that price has hit resistance and is back into the cloud.... a sign that the trend up may not be strong enough.

On the fib patterns chart we can see that price is close to hitting a 100 per cent retracement and may not get through there.

On the third chart is an ominous red candle and a hook down on the CCI...

In summary. the trend is not necessarily going to continue. we will have to wait to see what the next three candles bring on the daily chart.

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Most importantly I believe Japanese retail trader stops stand above (they are net long yen) and the potential of BoJ intervention stands on the other side.... now which way would I want to try and run it if I wanted a really big move.... BoJ has deep pockets.

If the USD= Index weakens and the yen ALSO weakons (collapse of the safe haven rick correlation) the crosses will fly high and the stop action will be amazing...

I believe AUDJPY will show this however the action can be very choppy.

Personally I do not like the AUD china risk so am happy to be just in on yen. Good luck I think you are on the right track...


Blaiser - what package are those charts from?

USDJPY Point and Figure

The last time I posted this chart... we were close to a breakout on the high side and now price has backed off...

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I am long both the USDJPY and AUSDJPY but I feel somewhat more uncomfortable about the later. I was just reading about the Japanese retail investor being net long JPY in the Financial Times. What is your source for this information on the Japanese retail investor?

It seems to me that the Japanese have recognized the futility of intervention. I think some may understand that the U.S. consumer is not coming back and intervention has had mixed results in the past.

Australias main exports are coal, Iron ore, gold, and food products. I read in the FT today that steel production is slowing down in China once more. I am still bullish on the other export products though. Also Australia has a slightly younger population than much of the developed world which may help its prospects. Note that the auto and home market hasn't fallen as fast as the U.S.

The charts are from Metatrader and stockcharts.com

We have seen the USD/JPY trade more in line with risk sentiment the past few days with the pair falling on the U.S. bank nationalization talk along with equities on Friday and rebounding today during Asian and European trading when the Citigroup news sparked a bout of risk appetite. I think the relationship needs to be focused on, as we have become so accustomed to seeing a direct correlation between the pair and sentiment, a break down of it would have us rethink our strategy.

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John Rivera is the author of Market Brief, Top FX Headlines, and Forex Trading Weekly Forecast on DailyFX.com.

Have noticed how analysts are not making trade analysis and recommendations these days. Nobody knows what to make of this market, really.