Chart # 1: USD/JPY at 200 dma
USD/JPY has been in bull market for sometime now. USD/JPY took support at 200 dma on 23 Oct 2013 and rallied from 97.67 to 105 by end of 2013. But in CY 2014: USD/JPY has seen compression in volatility, and this generally should breakout in direction of the trend which is up. Right now, USD/JPY is flirting with 200 dma again and traders will be eyeing for support here for a bounce back to 105 and higher. Will that happen? We will see. Having said that - never rule out anything. A breakdown below 200 dma will create panic and some short term selling.
Chart # 2: AUD/USD Breakout - A Classic Cup and Handle formation
Australian Dollar is the best way to play China story. China is Australia's largest trading partner and a growth pickup there bodes well for the country. China posted a PMI reading of 50.8 in June, the first expansion in six months; and that was good enough for AUD to make a bullish move. As you can see in the chart - AUD/USD looks all set to breakout above 0.944. The breakout here means a rally all the way to 0.975. Will that happen - we will see. It will all depend on how decisive the breakout is.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers