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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Cogito Ergo Sum who wrote (11947)	2/19/2009 1:39:31 PM
From: John Pitera	Read Replies (1) of 33421

Hi TBS, It's been interesting to watch the pivotal EUR/JPY cross. It made it's major low on Nov 23rd of 2008 was 113.54. And worked it's way to a slightly lower daily low on Jan 19th at 112.28. As we know when the Eur/JPY is going down then we are see risk adversion, stock market selling etc. We are now seeing the EUR/JPY in an ascending daily triangle with resistance at 120.00. This past week the bearish news in Europe is that eastern European countries have way too much of their Debt relative to their GDP is external debt priced in other currencies such as the Swiss France the Eurocurrency etc. Many home mortgages were written in CHF -- Swiss Francs as interest rate in Switzerland were lower, thus another form of the carry trade. and in other currencies. Now this is a longer term problem, but it does not appear to the currency markets that it will implode right now. We also know that the USD has been outright strengthening against the YEN, the USD/JPY is moving higher. These are some indicators that currency markets believe that the US stock market will fail it test of the bottom. The really large and saavy traders may want to see the DJIA make a new weekly low and a lower friday close than in 2002; However I doubt that that would lead to a further 1500 to 2000 djia point loss in a large selling jag. I would encourage everyone to keep an eye on the EUR/JPY 120 level if the EUR breaks above it, which I believe it will it should lead to some increase in risk assets. Next Monday and Tuesday will be important in that respect. As for the USD/JPY it is on a technical buy signal on the MACD and TMACD on the daily chart, the 60 minute chart, the 30 minute chart and the 5 minute chart. It is also on a technical buy on all 4 of those time frames using the 5 and 21 period exponential moving average crossover systems. Statistically the USD should continue it's rally against the Yen. I was trying to save a chart from DBFX Marketscope 2.0 but it does not want to let me save it as a jpeg, gif or any type of photo friend file. John

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