Volatile U.S. stock indices continue to keep carry traders on edge, with a late afternoon plunge in the S&P 500 leading to sell-offs in GBPJPY and EURJPY. While GBPJPY entered a bear market on Jan 2nd, when it closed below its summer of 2007 lows, EURJPY's daily chart continues to show higher lows over the past 6 months. The stock sell-off started at 2:45 ET today and culminated with the S&P futures down nearly 25 points in the heaviest volume in over a month, to post a 9-month low settlement. The S&Ps sliced through the November lows which coupled with the 9-month low settlement makes this a bear market.
EURJPY is still clinging to 160.00 which would be the equivalent of 1400.00 for the S&P 500 future should the correlation between those two markets continue.
Chart courtesy of eSignal
EURUSD continues to hold up, though it did post a doji candle on Friday just below the November highs, leading some technicians to point to a possible double top in that pair. Monday's close below last Fridayâ€™s doji low can also be taken as a sell trigger.
USDJPY found support late last week on a 13-year bull trend-line at approximately 108.00, as seen on the monthly chart, and continues to respect that level. USDJPY has been in a bear market since mid-August, and while it may be due for a bounce, sell triggers on the longer-term time frames will still be seen as trend trades. If you have questions on how to differentiate between trend and counter-trend trades, see www.brewerfx/jnorris/, or give me a call at 800-971-2154.
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