Pure Guesswork

The short term impulsive move late last week hit a 6.854 (phi to the 4th power) Fibonacci target:

This morning it has fallen back to the region of the 2.618 target level (1.4010). For most of the morning prices have cycled around that region, with support at the next lowest minor Fibonacci level (1.3979) and resistance at the next higher minor level 1.4048.)

Notice how price action this morning has been distributed around that level.

We've traded down in the last 30 minutes or so to that lower bound. Then back to the 1.4010 level. It looked like that level was going to become resistance rather then a center of distribution, but then the "pledge of support" from China hit the wires. Still believe 1.4040 to 1.4050 is a good area for a fade, if we get there.

Posted by Pure Guesswork at 9:11 AM | Permalink | TrackBacks (0)

An update to a pattern noted in this post from October 12.

From that date until last Friday we traded around the Fibonacci target at 1.3787 (the 2.618 extension of the base). Last Friday we began a genuine probe higher, putting the next target, 1.4051, in play.

A 4 hour chart:

A 30 minute chart shows the internal Fibonacci dynamics of the area between the two successive targets. Notice how we have gotten 61.8% of the way to the 4.236 level at 1.4051 and there found resistance. The 38.2% level provides support as we cycle around the half way level.

And for those who think these levels arbitrary, here is a distribution of price action since October 12. Notice how it has been distributed around the 1.3780 level (the 2.618 target), with a bias to the upside.

Posted by Pure Guesswork at 12:45 PM | Permalink | TrackBacks (0)

Is that it? While attention has been elsewhere (Europe), has a long term bearish pattern in the USDJPY pair completed itself?

This pattern goes back to early 2010, when the pair traded in a range around 0.9300--0.8900. An impulsive move down had a major Fibonacci target (2.618) around 0.8260. We got to that level and surpassed it by late summer. Then for months it oscillated around this level, before spiking down in March of this year to the next major level down (4.236). Then back up to the 2.618 range trade.

By late Spring we were on the move down again, stopping for a bit around a minor Fibonacci level, then sinking once more to the 4.236 level around 0.7630.

But this time the level did not provide a center of gravity but an actual floor for prices. Since August we have traded in a contracting range with no real energy on the downside. Yesterday we had a spike down to the 0.7630 level once more and once more a violent snap back above 0.7700. Today we sold off a little and then trading seemed to dribble to a halt. Eventually we will move off this level one way or the other. For now it seems increasingly evident that nobody want to sell dollars for yen at this level. Nobody at all.

Posted by Pure Guesswork at 3:40 PM | Permalink | TrackBacks (0)

Nice trip while it lasted. Traded up to the 2.618 Fibonacci target at closed yesterday. Then a little dance around that level most of today, a dash towards the next target (4.236)in the afternoon and game over.

Posted by Pure Guesswork at 4:22 PM | Permalink | TrackBacks (0)

Target was 2.618 Fibonacci level roughly around 1.3790. We achieved that this morning with a little to spare. There is the possibility that just as price oscillated around the 1.618 level for a few days, the 2.618 level could provide a pause rather than final target. If that were to be the case, the next target in a continuing pattern would be around 1.4050, the 4.236 Fibonacci level.

Posted by Pure Guesswork at 6:47 AM | Permalink | TrackBacks (0)