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Asian Stock Markets bounced higher

Market Analysis

USDJPY and  JP225 ,  Daily

The dollar has rebounded today after several days of losses against its main peers. USDJPY led the way, tracking a rebound in risk appetite in Asian equity markets, aided by encouraging corporate earnings reports and a stabilization in oil and other commodity prices.Nikkei gained nearly 1.5% as technology and telecom stocks led the way and a weaker Yen added support. Profit taking seems to have run its course and traders are leaving concerns about the progress of U.S. tax reforms and China’s slowdown and credit burden behind and refocus on positive corporate earnings. Furthermore, Tencent jumped higher, after posting better than expected sales growth, which is posiible to help Asian stocks to more higher.

Hence, the USDJPY has logged an intra day high at 113.25, which is 2 pips shy of yesterday’s peak and up from yesterday’s four-week low at 112.48. The pair seems that has been stuck the last 2 months between 200-Day Ma at 111.70 and 114.00 area. However significant is the fact that despite yesterday’s dip, the pair manage to be held above the 50-Day MA and bounced back at 113 levels, by keeping the 50 DMA as the immediate support level. Meanwhile the Daily momentum indicators are mixed, with MACD lines still positive but Stochastics  at 24, sloping with a flat acceleration above oversold territory, suggesting that bulls are still in control. .

However in short term, the downside momentum still holds with  USDJPY to be traded below 200-period MA in the 4Hour chart and with MACD remaining negative since November 8. Hence only a break below the 23.6% Fib. level at 113.00 and more significantly below the 50-Day MA and recent low at 112.30, could confirm a bearish momentum down to next support at the confluence of 38.2% Fib. level and 200 Day MA at 111.70-112.00.

Meanwhile in short term a break and a hold above 113.30 could suggest further upside movement today up to the next resistance at 113.60, however in a Daily basis only a  a break of 20-Day MA at 113.70 could suggest a retest of 114.50-114.70 area.

 

Nevertheless, today’s gains in Asia Stock market defaced yesterday’s position on JP225.  Yesterday on Global Stocks sell of  I wrote: “Nevertheless, weekly chart is forming an evening star pattern, which if it confirms,it will add further bearish formation to JPN225. Hence with negative momentum still holds, a Daily / Weekly Short position taken , with entry at 21926.9. Target 1 was set at 21581.0, which is down to the gap seen on Japanese election on October 22 and also on the mid of 38.2 and 50.0 Fib. level. Target 2 is at 50.0 Fib level, at 21290.0.  Support levels at 22192.0-22265.0 and 22420.0 respectively.”  – This position hit SL , with a Net loss at -338.1 pts. 

However with dollar today posting moderate gains versus the Australian and other dollar bloc units, sterling and other currencies, the AUDUSD entry taken on November 13, hit Target 3, with + 78 pips gain.  Hence for November I m still on a break-even point.

 

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Andria Pichidi

Market Analyst

HotForex

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