Posted by on Mar 24, 2013

By Dino Zannoni

This post in italian





Since the Federal Reserve has offered to markets no specific ideas on speculation on the future monetary policy, the week is now particularly rich in anticipatory regional data from the Fed itself. These data could lead to a trading range phase on the American stock, if there will not be any positive surprise. For this reason, the failure violating 1.29 (200-days moving average) is an opportunity to enhance the long positions of EurUsd with stop loss below 1.2850. Concerning the macroeconomic data: on March 25th the Chicago and Dallas Fed index will be followed by the consumer confidence on the 26th . On the same day, durable goods orders, housing prices and the sale of new homes will be published. In conclusion, personal income and spending on March 29th.



What is happening in Cyprusat the moment puts a negative atmosphere on the market, and the volatility could still be a player. Among the events to be reported this week, the Euro-Japan summit scheduled for March 25th could influence the trend of the yen in the coming weeks. Among the macroeconomic data to remember: the factory orders and Italian retail sales on March 27th, the European confidence of businesses and consumer (also on March 27th ), the M3 money supply and the German unemployment (March 28th ).



The following chart represents the short exposure on the Yen of the hedge funds and it shows an excess of negative sentiment on the Japanese currency that could facilitate a significant rebound in the coming days. The net short positions of the hedge on the Yen have fallen in relation to the open interest at 40%, an extreme level that in the past has led to an appreciation of the Japanese currency in the coming weeks. The fuel for bears is over at the moment, and we can get this information also from the rate of change (Roc to 1 year), that has risen more than 20%. The same thing happened in 2001 and2006. Inthe first case there was a correction of about six months of UsdJpy before the last bullish hint; in the second case, the market began a long trading range that preceded the devastating bear market 2007-2009 .

 yen chart

On March 29, the relevant Japanese economic  topics including unemployment, industrial production and inflation will be published.


Emerging countries
  • South Africa: trade balance (March 28th )
  • Brazil: trade balance (March 25th )
  • Turkey: interest rates (March 26th )

The event of the week will still be the meeting of the five BRICS countries (Brazil, Russia, India, China and South Africa) that will be held on March 26th – 27th in South Africa and from which some messages for the Western world that should not be underestimated especially at a currency level should come from.


Trade of the week : short NzdJpy at 79.00 stop 81.00

There are not so many statistics cases but certainly NzdJpy could represent a great trading opportunity for investors of the forex world. The weekly chart shows us the exceptional level of resistance projections  reached by the cross, together with oscillators that, historically speaking, show a clear bearish signal. Then,  after the downward movement in 5 waves between 2007 and 2008, NzdJpy has began a rise that has stopped in area 80. Here we can find the 61.8% of retracement of the bear market, but also the perfect equality between the two upward legs started in 2009. This is a necessary assumption but it is not enough.  Let’s look at the oscillators, the RSI at 13 weeks has entered the overbought zone and the and 1-year roc  has risen above 20%. This combination (overbought + change in one year more than 20%) was recorded only a few times in the last 10 years (see the green flags), but on those rare occasions, the correction, whether a long lasting one or not, has always arrived.