US Stock Market rebounded from Monday’s lows after FED’s Bernanke reiterated on his conviction of QE benefits. The Chairman of the Federal Reserve defended the bond-buying measure, saying that the risk is low and he is “one of the best” in keeping inflation down, which is the primary concern from the naysayers. His testimony before the Senate Banking Committee settled nerves which were set off by previous week Fed minutes, which hinted at disunity within the Fed, with “a number” of voters seeing arguments for Fed to pullback or stop QE altogether in 2013.

Fear Index VIX lowered substantially after the speech, while US10Y yields improved, though not able to gain back the fallout after Italian election results.

Hourly Chart

AUDJPY

AUD/JPY’s behavior is similar to yields – in the sense that yes prices did rebound, and no the recovery is not enough to take back what Monday has chipped away. The rebound was contained within the descending Channel, and a far distance from 95.0 round number support turned resistance.
Price has also failed to test the descending Kumo, and perhaps more damningly failed to break higher from the Kijuu-Sen (red line) which is shadowing current price action. Stochastic indicator is also hinting to us that a reading peak may be in play now, with previous peaks formed on 23rd Feb just before the huge sell-off. The pressure remains on AUD/JPY and it is difficult to see price’s ability to climb out from this especially after price is not able to wrestle control from bears even after Ben Bernanke has given his vote of confidence on the economy.

Daily Chart

Market Pulse FX

Bearishness on Daily Chart remains similar to Yesterday. There will be traders who are using current bear candle as confirmation of bearish breakout, but be aware of the extended sideways movement in Jan 2013 between 92.7 – 95.0 which may still provide some support. Should current strong bear sentiment continues, we could see a 3 Black Crow candlestick pattern that can give us more confidence of a strong breakout follow-through especially if the 3rd candlestick (tomorrow) manage to break the consolidation zone.