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Trading Currencies – Yen To Dollar Daily Chart 7th April 2009

Dollar Yen - Daily Candle Chart 7th April 2009

Dollar Yen - Daily Candle Chart 7th April 2009

Yesterday’s candle has provided a contrarian signal to the bullish breakout that we saw confirmed in the last few days ending the day as a gapped up shooting star, clearly not the bullish signal one would have expected, and giving us a clear warning that the move higher has temporarily faltered whilst the market takes a breather.   With such significant support now in place below, and with all three moving averages pointing higher, this may only be a temporary blip in a longer term move to retest the 102 region and above.  However, we need to take note of this important signal and to factor into our trading decisions for today and tomorrow, if and until we see a bullish signal once again to confirm the re-establishment of the trend higher.

Trading is further complicated this week by thin market volumes as traders close their positions in the run up to the extended holiday period and with a number of fundamental news items on the economic calendar trading the dollar yen may be particularly tricky at the moment.   This morning for the Yen we had the Monetary Policy statement issued by the BOJ who unveiled further steps to ease credit problems in Japan as the global crisis pushed the world’s second largest economy into its worst post war recession.  As widely expected the bank kept interest rates at 0.1% on a unanimous decision.  The BOJ also indicated that it would provide additional finance against a broader range of assets in order to encourage commercial banks to begin lending once again.

My suggested trades for today is to continue to look for intra day trading opportunities in the shorter time frames, possibly attempting small longs with very tight stops and only, based on strong signals such as hammers or dojis and not using any time frame longer than the 15 minute chart.

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