Japanese Governemnt Bonds - Yen Debt Bubble?

Here is a Monthly chart of the JGB performance.

Barron's magazine ran a story this week, which made the case the Japanese economy is a ticking debt time bomb (maybe the leader of a pack of time bombs across the industrialized world). Total population in Japan is falling fast, and falling even faster is the working age population to support Japan's massive debt to GDP ratio, measured officially at around 217%, that compares to 81.2% for the US and an average of 72.5% for the G-20 nations, according to Barron's. (blackswantrading.com/)

Interesting to me is how is it possible to maintain a debt to GBP ratio over 200% and still manage to market your massive debt. the chart shows that JGBs are in the 128 - 142 range for the last 10 years and still remain strong with all time low yields..

UUP‎ - PowerShares DB US Dollar Index Bullish (NYSE)‎ > REVERSAL

Reversal in the USD Index trend?

Check the UUP - USDX Bullish Fund has closed Friday trading with recorg high Volume!

Interesting for me was to check the distance from the 21-Day MA.

You would find interesting cyclical correlation noted on the Daily chart. If the noted cyclical bottoms signalled by the confluence of both the RSI (14) and Wilder's DMI (14) are to be trusted we have seen ay least the short term bottom in USD Index.

The reversal should be confirmed by the record volume on the Friday closing.

USD Index ($USD) at 76 level - long term line in the sand

USD Index is trading close to the 76 level which is often described as Line in the Sand.

Another interesting technical fact is the Falling Wedge Pattern which has bullish implications - only given the the current lows hold!

EUR/USD rejected at 1.4766

Here is the EUR/USD daily Channel (parallel lines). After making a top at 1.4766 yesterday - price was rejected 4 times off the 1.4750 level - hence the liquidation seems to start.

Daily chart shows the Channel top was probed higher at 1.4766 bu it held the real body of yesterday's surge.

To put the short term price action - the 4-hour chart shows the EUR/USD still trading in the channel it has been trading inside the last 2 weeks since the breakout above the 1.4446 level.

4-Hour Channel bottom comes around 1.4644 - a level to watch for Support or breakdown.

Hourly chart reminds me previous similar cases of liquidation markets with those long drops and no retrace. Currently the Hourly 100-MA at 1.4667 holds and the 200-MA at 1.46 is the target if it is a truly liquidation day.

AUD/USD - too much too high?

So if we look at the market with the assumption that easy and most money are made in trading trends - here is the picture:

1. Weekly - We have spent all 2009 till present in one big rally from 0.63 to nearly 0.88 - with only one Bull Flag consolidation in June..
the pair trades high above the 61.8 fib and he target seems to be the 78.6 at 0.9029..

2. Daily - the most notable pattern is that Bull Flag consolidation channel that took the whole month of June to form and the breakout occured in July above 0.81

the 3 horizontal levels are the stairway pattern of ranges:
0.8280 was a pivotal level and a solid support till in start of September the Resistance at 0.85 was broken.

then the range established itself a notch higher between the 0.85 - 0.87 - this level was broken yesterday along with new highs in Gold and Silver.

3. 4-hour chart - we see this 0.85-0.87 range and the rounded top formed since the break of 0.87...
------------------
so what's the point of this story:

if trading short term - then we have to see if support at 0.8667 which is confluence of previous range top now turned support and the 21-MA which is pivotal to the present time frame. then we either rotate back inside the 85087 range or take off higher.

my take is we have some time out since this can't go on forever.

GBP/USD Harmonic Balance Range

GBP/USD Daily chart is a little puzzle for me and that's why I'm challenged to rationalize the current price action.

The Pound has spent last 3.5 months in roughly the 1.61 - 1.67 range with a down overshoot to 1.58 In June and Up-Overshoot to 1.70 in Aug.

So this makes a balanced price distribution in a 600-pip range (1.61 - 1.67) with 2 equal overshoots which also equal 1/2 of the middle range (300 pips: 1.58-1.61 & 1.67-1.70).
NOTE: Here is a rough range figures and this is an attempt to analyze the distribution of the price within the ranges which I'm just experimenting with.

So right now we are standing at a pivotal area defined by the 21-Day MVA at 1.6416.

So Since today we have a small inside, tight range day - that means tomorrow we either accelerate or retrace and resume uptrend. I can see these 2 scenarios:

1. Bearish case:
- the 21 / 55 Day MVA Dead Cross
- 09/11 was a Grave stone Doji + Rejection off the Upper range area + confirmed by 2 consecutive down days.
- trigger for an acceleration will be a breach and close below the 55 DMA/1.6450 & 21 DMA/1.6416

2. Bullish case
- since Start of September we are in a sequence of higher highs / lows
- the last 3 down days actually made a neat 50% retracement of the 1.6114 - 1.6740 move (50%=1.6426)
- today's Low is higher than yesterday's and above the 21-DMA
- rising 89-DMA at 1.6349 - held the downtrend and the reversal in the start of this month - now it runs above the 09/07-08 Lows at 1.6321/25
......................................
However I feel again like I'm trying to pick a side instead of objectively analyzing the chart. One clue to the puzzle might be the outright break above the 200-DMA in EUR/GBP which promises relative weakness in GBP compared to EUR.

this means if EUR/USD now pauses at 1.4735 and retraces - then the GBP/USD will have an even steeper decline.
However if Euro accelerates thru resistance the pound will also surge but lagging.
On Crosses GBP/CHF is lingering right at the 200-DMA and GBP/JPY is developing today a big Doji pivoting around the Sept 01/02 Lows which might be good for a bounce.

EUR/USD meets the T/L Resistance at 1.4735

Here are some Sequential facts:
> from the base at 1.42 we have 530 pips trend with 9 Up days and only 2 down tight range days.

some evidence from March '09 show we had a powerful move of 10 up days with only 2 down days in the basing structure.

what is interesting to me is we either bounce off the current Channel top at 1.4735 or we accelerate to meet the projected top of the bigger Channel which is at 1.52 right now..

NOTE: the large/white upper T/L - if you connect March _ June highs - there is a trendline Resistance which if projected backwards just goes perfectly to the Jan high at 1.3328 - the only problem is the lower T/L..

- since I try to chart an Uptrend - then I must be focused on the Supportive T/L and the Large/White 'channel' has some flaws - like my call for a straight 500pip move to 1.52.

Certainly calling another 500 pip rally is bold but I get clue from the Dec'08 squeeze and the March '09 sharp up-move.

WHY? --- well I gather from recent trading themes that market is geared to seize the USD carry theme.

So if we step on that assumption then any rise in risk appetite should see USD selling --- from the pieces of analysis i read the USD is now much better funding ccy than JPY or CHF - so what was Pavlov's dog reflex to sell JPY before is turning to USD selling.

Checking on the markets we have a massive moves to new highs in Gold (1022), Silver (17.45), Copper (294 - just shy of 298 highs), S&P500 up 1.30% to 1066 -- so we have stocks and commodities rally and USD depreciation hedge in Gold and Silver at the same time.

----------------------------

I should check twice since in trading this same impatience has cost me a lot just for trying to fit my trading with some occasional 'bright' idea instead of double checking and waiting for a respective confirmation.