JPY crosses trend, relative strength reality check
Since money is not an unlimited resource, most traders face a problem of picking the right pair to trade/where to deploy. This is a systematic, scientific method to select pairs based on a existing theme that any individual can adopt over gut feeling. Each user can personalise starting point and time frame but important premise is that trend has not changed.
- Since 15 December FOMC, JPY gained most in terms of GBP making GBPJPY pair the best short.
- Following good shorts were NZDJPY, USDJPY in declining order.
- AUDJPY turns out to be worst performer.
- Starting from beginning Feb, there is little change except for a swop between NZD and USD.
- Month – month, NZDJPY still down, now 75.45 is just a shade under 38.2 Fib-R of Feb hi-low.
- M-M, USDJPY still down, now 113.39 just under 23.6 Fib-R of Feb hi-low.
- On same basis, CADJPY is down, now 85.19 is 76.4 Fib-R.
- EURJPY now 125.89 is just shy of 38.2 Fib-R.
- GBPJPY now 161.70 is under 38.2 Fib-R.
- AUDJPY now 85.86 is between 76.4 – 100.0 Fib-R.
As a tool, such method looks at relative strength based on past performance. While adjusting duration and starting point of reference creates a theme e.g. since the last time Yellen talked – that can improve relevance, user relying on such a method is assuming that past trend is intact.
Note that overlays (above 2 charts) do not lie when compared to inspection of individual charts. GBPJPY and NZDJPY which were labeled ‘best shorts’ are below 38.2% retracement of their previous month’s movement. On the other hand, a strong bullish pair like AUDJPY is close to retracing it’s entire Feb losses. In fact AUDJPY did a tiny bullish expansion yesterday, trading above February high briefly.
Connect the facts here with what Binni posted in G+ https://plus.google.com/+Terraseedsforexstrategy/posts/daSRzWYZntw.
If you are not able to view, follow instructions here closely.