BETTER LATE THAN NEVER - It was nice to see the follow through in Cable on Wednesday. I had talked about the Pound getting hit a little harder than it probably should have, and was looking for some form of a correction. While it took a good part of the day for the move to play out, we finally got that break back over 1.6200 into the US session. I had a long position which I covered for a profit above 1.6200, and will now stand aside on this one. Technically, we still should see additional Cable gains towards 1.6300 to fill the post weekend gap open, but I was happy with the move and now have my sights set on another major pair.
IME FOR DECLINE - Yen declines have been quite intense this week, and with USD/JPY finally clearing the previous January peak at 105.45 and breaking to fresh 6 year highs above 106.00, it looks like we could soon see a period of short term weakness, to allow for some severe overbought studies to unwind. Ultimately, the trend here is highly constructive, and the market should be on its way to retesting the August 2008 high at 110.70 in the weeks ahead. But for now, considering the daily RSI on USD/JPY is above 80, I have a strong feeling we will get a pullback in the sessions ahead. So for Thursday, I like the idea of looking to fade any additional gains beyond 107.00, in favor of a healthy correction back down to 105.45 at a minimum. I will keep you all posted if and when I do take the trade.
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