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Stocks Rally; Seeking Longs On Yen Crosses


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Feb 12 2014

The US stocks once again moved nicely to the upside, so I am already wondering if maybe we have seen a completed correction at 1732 on the S&P500 and if market is already heading up to new all-time highs again . At the same time we can also see that some commodities are following stocks, while the FX is surprisingly very slow and not responding much to other markets. Even USDJPY is lagging for the last few 24-48 hours which is tracking the S&P500 quite nicely.

S&P500 vs USDJPY 4h

With bullish stocks and USDJPY we still think that opportunities are on the short side of Japanese yen against the other currencies. However, we would need some pullback on Yen-crosses before we may look for any trading candidates in the risk-on environment. A pullback could unfold soon if we consider that the S&P is in final stages of an impulsive rally. I can count five waves up from 1732, so we may see a downward correction in the rest of the week. A set-back on stocks would then most likely cause also a pullback on Yen pairs. Short-term resistance on the S&P futures is at 1820-1830

S&P500 (Mar 2014) 1h

EURJPY is showing nice five waves from the lows, so maybe wave B retracement back to 138.10/90 area will offer some long entries.


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