One of the
more reliable indicators of price direction in Technical Analysis is the weekly
engulfing candle, about which we have written here before. The chart above
shows this in action over the last year or so in gold futures. The circled bars show where a
weekly engulfing candle did, indeed, predict the direction of price for at
least the following week, often for longer.
Today is
the last day of the current week. Unless there is a pretty sharp rise in the
price of gold today, this week’s bar will also be an engulfing one, and it will
be coloured red.
Yen strength as a ‘safe haven’ move
Yesterday
we nominated the Yen as one of the currencies that might be in line for a fall
against the US dollar. This would mean that the USDJPY pair would rise in value
and, sure enough, this proved to be the case during the London
and New York
sessions yesterday. Last night GMT, during the Tokyo trading day, which opens at midnight
GMT, the Yen took on new life and the USDJPY pair fell. Quite a bit.
The cause
of this, apparently, was a precipitate decline in the Nikkei index of Japanese
stocks. This caused a flight to the ‘safety’ of the Yen, which is regarded as a
strong safe haven currency and if it has been regarded as such since the start
of the correction in US and European stock indices, it is hardly surprising
that it should be so treated when the Nikkei has its correction moments. What
is remarkable is the apparent belief on the part of Japanese investors that their
stock index might be exempt from this correction, which is taking place all
over the world.
At the open
in Frankfurt and London this morning, which take place at 7:00 GMT and 8:00 GMT
respectively, there were signs, albeit tentative enough, that some traders saw
the USDJPY pair as being at a bargain level, and were buying.
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