Forex Charting Tutorials

The weekly chart for Geppy shows price making 3 waves down from 251 to 192 on the zigzag indicator. We are currently in a corrective 4th wave up, supported at 209. There is more room to the upside, possibly to the 219 area, which is a swing low from August, 2007. Price is in consolidation after encountering resistance around the 213/214 area. As long as the 209 area holds as support, she should break upwards to test the white weekly trendline resistance.

The daily chart shows this a bit more clearly, and supports my upward bias if price maintains trading above 209.

We see the zigzag indicator showing corrective wave 4 down to the previous swing high of 209 from May 2nd, 2008. Price is consolidating this area between 213 and 209. A 5th wave up would open the door to test the 219 area.

If you look at the monthly chart for the yen carry pairs, you can see nearly 3 months of bullish candles forming. Risk aversion, which caused a massive unwinding of the Yen carry trade, seems to be contained for the time being, at least for now. As of the time of this article, we have seen a short term bottom in the yen carry trade pairs.

Here is the montly chart for gbp/jpy.

 Here the monthly chart for aud/jpy.

Here is the nzd/usd monthly chart. We see 2 months of bullishness, followed by the current montly candle showing weaker growth. Stand aside on this pair, as the trend is not as clear. the price has retraced to the 5 sma, but shows a previous breach.

 Here is the monthly chart usd/jpy.

Here is the eur/jpy looking to retest the all time high in the pair.

We will continue to monitor this yen carry trade situation. Risk aversion market sentiment would cancel this view.

Until risk aversion returns, the strategy is to buy dips in these pairs, after you see a rejection of any downward retracement. This strategy will pay a nice daily swap (interest income) over time, as long as the the pairs are maintaining the overall upward trend.

Place buy orders at areas of support with a reasonable stop loss placed on the opposite side of that support. Move stop loss to break even when the position moves into profit, and collect the daily interest with no risk of loss. Trail the stop loss up to protect profits as the market price movement allows.

There seems to be a correlation developing between the chinese and other asian equities and the yen carry trade. Notice how the yen carry pairs, are advancing as the hang seng and shanghai markets tumble. Also notice how the long term gbp/usd and eur/usd experienced profit taking and some closing of positions. It is my guess that the profits from these usd carry trades were used to cover losses in the asian equities.

Ovaforty

To be continued….