EURJPY Consolidating, With Gap to the Short Side

Again, sorry for the lack of posts, but I'm seeing something setting up that has caught my eye.

The EURJPY is consolidating just above 127.00, with the EURUSD finding support at 1.3585 and the USDJPY at 93.50.


In the past, I've written about using the EURUSD and the USDJPY as indicators for the EURJPY. If the indicators break below their support levels, and the EURJPY breaks below the major pshych level at 127.00, we could see the EURJPY make a break down and try to close that gap down to 125.70. That would be a nice 100+ pip move. This next hour or two, going into the NY open is key.

Talk of Risk Aversion

There was some talk in support of the USD at the G8 meeting this weekend in Italy. This morning, some players are talking about a drive toward Risk Aversion to start the week. The USD has already gained some momentum this morning as reports of a rise in the sale of US Treasuries for the month of April, over the same numbers in March. Russia’s Finance Minister Alexei Kudrin said that Russia still has faith in the USD as the world's reserve currency. He also went on that is was too early to talk about replacing the USD as the reserve currency. This statement coming, after sometime last week, a colleague of his had suggested otherwise.

Risk Aversion may also see a buying spree on the JPY later in the day also.

GBPUSD and GBPJPY

GBPUSD has been following Friday's trendline down and has yet to get back to 1.5970, but now is threatening to break above the trendline. PA is slow, but it is Monday.

GBPJPY, after staying above Friday's trendline, following the NFP, has since taken a dive under the trendline, also below the 157, and then took a bounce off of the 156.50. One of the readers, joked with me about my affection for the psyche levels on the GBPJPY, well if you look at most of the S/R levels, 158, 157.50, 157, 156. 50, etc. on this pair, they are very reliable, more so than on any other pair.

EURUSD is still shying away from 1.40.

Of note, the AUDUSD is starting to form a wedge, with .8080 as resistance.

GBPJPY

Looking at the GBPJPY, it has traded a range of 157 and 155.50 (Psyche levels). A squeeze has formed, not as strong as I'd like see, but it is a clear tightening of the range. I'm going to try and post this quickly, as the moves have happened about this hour, this week, when it normally happens an hour or two later. Once a clear break of the blue consolidation lines has occurred, watch for S/R at 157 and 155.50.

GBPJPY Update

So far, I'm not seeing much on the GBPJPY. There is a definite resistance setting up on the 156.85. Could watch for a break above that for a possible scalp with a tight stop, or a possible fall back to 155.72, to form a range. Just keep an eye on the PA. After the wacky 48 hours we just had, I'd be careful and keep trades small until something more definite and clear sets up. I'm thinking about a rebound today, and weakness back in the USD. Have to keep an eye on US equities in overnight trading to see if they are back up.