Japan officially enters recession, posting its second straight
quarter of negative growth. The news weakened the yen while the Nikkei,
even though it coughed a bit, stays near its 5 year highs. Actually the
Nikkei simply hit a resistance zone (that I mentioned in my previous Nikkei post) around 17 440 which has been a turbulence zone since the 1990's and that rejected the Nikkei in April 2006 and November 2007. Coincidence or not, this modest red candle happened at a key level and was triggered by bad economic news.
BUT! I must tell you that in my humble opinion, if Japan had announced its GDP growing by 5% or even 10% for the last quarter, the yen would have been down and the Nikkei would keep going up anyway.
My point is: don't pay attention to the news and don't even think that it has any sort of influence on the market whatsoever (apart from a 100 pip variation in the hour following the release maybe). Never trade the news. And don't do drugs either.
In normal conditions, the "thing" behind a market's direction is stronger than Mario Draghi being dovish or George Soros farting. A market is like a huge oil tanker: it takes time and effort to make it turn. If anything, a comment by a central banker (or any other important people with an expensive suit, gray hair and a fat belly) that shakes any given asset against the weekly/monthly direction is nothing else than an opportunity for you to re-enter the dragon.
Looking at a daily USDJPY chart, one thing strikes me: it's sooooo bullish that I hope that not even one person on Earth is considering selling a hypothetical high.
The downward resistance from the beginning of the year 2000 is breached big time, and the pair has even broken out above an ascending channel from 2013.
Now the pair might, maybe, need a little rest. A deep breath before it continues climbing to the top. ADX has actually peaked and is pointing down, the current daily candle is mixed, RSI is in overbought levels, and the kumo is faaar below.
Unless Abe announces that they decided to distribute free 10 000 yen bills in the streets of Tokyo, I think that it is time for this pair to take a break. Keep you hands next to your guns and be ready to pull them.
BUT! I must tell you that in my humble opinion, if Japan had announced its GDP growing by 5% or even 10% for the last quarter, the yen would have been down and the Nikkei would keep going up anyway.
My point is: don't pay attention to the news and don't even think that it has any sort of influence on the market whatsoever (apart from a 100 pip variation in the hour following the release maybe). Never trade the news. And don't do drugs either.
In normal conditions, the "thing" behind a market's direction is stronger than Mario Draghi being dovish or George Soros farting. A market is like a huge oil tanker: it takes time and effort to make it turn. If anything, a comment by a central banker (or any other important people with an expensive suit, gray hair and a fat belly) that shakes any given asset against the weekly/monthly direction is nothing else than an opportunity for you to re-enter the dragon.
Looking at a daily USDJPY chart, one thing strikes me: it's sooooo bullish that I hope that not even one person on Earth is considering selling a hypothetical high.
The downward resistance from the beginning of the year 2000 is breached big time, and the pair has even broken out above an ascending channel from 2013.
Now the pair might, maybe, need a little rest. A deep breath before it continues climbing to the top. ADX has actually peaked and is pointing down, the current daily candle is mixed, RSI is in overbought levels, and the kumo is faaar below.
Unless Abe announces that they decided to distribute free 10 000 yen bills in the streets of Tokyo, I think that it is time for this pair to take a break. Keep you hands next to your guns and be ready to pull them.
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