USD/JPY Golden Cross

[DannyBly 10]

Although momentum has slowed down on the daily chart, the 50 and 200 SMA's appear poised to cross over with further movement to the upside (golden cross). We have resistance to the upside at 108.58 and support rising underneath with the up trendline that forms the bottom of the channel as shown on the chart. Looking for bullish follow through if the recent resistance at 108.58 can be violated and the 50 and 200 SMA's cross.

 

 

Analysis By TradersLog.com

[cowpip 10]

Although momentum has slowed down on the daily chart, the 50 and 200 SMA's appear poised to cross over with further movement to the upside (golden cross). We have resistance to the upside at 108.58 and support rising underneath with the up trendline that forms the bottom of the channel as shown on the chart. Looking for bullish follow through if the recent resistance at 108.58 can be violated and the 50 and 200 SMA's cross.

 

Hmmm.... it appears that Oanda doesn't use a true simple moving average formula to compute their SMA's. It appears they're using something closer to a Weighted moving average.

 

Here is the daily chart I use with the 50 and 200 SMA's in black (ignore the other junk). You'll see that they are no where close to crossing over, yet, and price is currently on the UNDERSIDE of the 200 SMA (which has been perhaps helping to hold price down).

 

I'm personally on the other side of your trade - looking for price to return back into the 105/106 range on $/yen. I don't believe the fundamentals support an interest rate hike by the Fed and any lasting hawkishness in their statement will be diffused quickly when the markets realize that the Fed is hogtied. If they raise rates, they risk losing control of the progress they have made with the financials. The fundamentals are far from what the Fed would probably like to see (stability in housing prices).

 

They're essentially damned if they do, and damned if they don't. Their own inflation readings are also not much hotter than they have been in recent months (although I personally think the inflation numbers are so badly cooked that they don't resemble reality - but the Fed still relies on them - supposedly). End result: they're forced into playing with verbs. Talk the inflation talk to try and help keep the dollar elevated (to control inflation), but don't walk the walk for fear of completely destroying everything they've done so far. Talk is powerful, but if they muck this up by causing the market to think that they won't hike, the negative impacts could be pretty strong. Unfortunately for them, this game will only work so long before the markets lose confidence.

 

It'll be an interesting day tomorrow... the ranges have been contracting. A breakout smells imminent.

[Sledge 13]

I don't believe the fundamentals support an interest rate hike by the Fed and any lasting hawkishness in their statement will be diffused quickly when the markets realize that the Fed is hogtied. If they raise rates, they risk losing control of the progress they have made with the financials. The fundamentals are far from what the Fed would probably like to see (stability in housing prices).

 

They're essentially damned if they do, and damned if they don't. Their own inflation readings are also not much hotter than they have been in recent months (although I personally think the inflation numbers are so badly cooked that they don't resemble reality - but the Fed still relies on them - supposedly). End result: they're forced into playing with verbs. Talk the inflation talk to try and help keep the dollar elevated (to control inflation), but don't walk the walk for fear of completely destroying everything they've done so far. Talk is powerful, but if they muck this up by causing the market to think that they won't hike, the negative impacts could be pretty strong. Unfortunately for them, this game will only work so long before the markets lose confidence.

 

Cowpip:

Very nice way you nutshelled a pretty complex subject on the eve of some news that assures us of some money being made for some and lost for others tomorrow!

[Guest forsearch]

Hmmm.... it appears that Oanda doesn't use a true simple moving average formula to compute their SMA's. It appears they're using something closer to a Weighted moving average.

 

Here is the daily chart I use with the 50 and 200 SMA's in black (ignore the other junk). You'll see that they are no where close to crossing over, yet, and price is currently on the UNDERSIDE of the 200 SMA (which has been perhaps helping to hold price down).

 

Keep in mind that long range Moving Averages, especially EMAs, require a significant amount of data in order to chart properly.

 

Thus, unless proven otherwise, you must follow the dictum set forth by Ronald Reagan:

 

"Trust, but verify."

 

-fs

[cowpip 10]

That's true, but for SMA's, only the number of days being computed should be necessary (for a 200 day sma, only 201 days of data should be needed). I'm pretty certain Oanda has that kind of data in the cache, and I know for a fact that MetaTrader does (which I like to use as a charting package). I trust MetaTrader more than Oanda. If I plot a weighted 200 day MA using MetaTrader, I get nearly an identical plot to what I see with Oanda (give or take a small bit). So I'm really curious why Oanda is calling it a SMA when it clearly does not appear to be. It's an oddity.

 

As you say, trust, but verify. That's so important.

[DannyBly 10]

Thanks folks - I have heard other reports of the Oanda SMA's not being accurate also

[arifwise 10]

you are so smart calling the resistance at 108.58. pray you are bless with abundance of love, health and wealth