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Blackday: EUR-USD/JPY
Thursday, November 03, 2005

FWIW, the trend is still in place on both the above pairs so I'm rather hoping that you changed your mind about the EUR/JPY and went with it.  I  know it can be difficult to comprehend that a trend will continue when it  is seen as already having gone quite far but such in the nature of trends  in general that selling Yen was the only trade to make.


There is one  small caveat of note here: 

Today, DailyFX.com reported exactly what I had already mentioned to you about extreme positioning of longs on the Yen and  how some see this as a contrarian play.  I believe that this is being born  out in the price action in USD/JPY through it's limited range already seen  once this month at 115-116 and now at 116-117.  Although a break higher  can certainly not be ruled out, this extreme posiitoning may not only  limit further gains but in fact may being starting to attact  USD$ sellers.  As such, my stop is now a stop and reverse which is  following the pink trendline shown in the attached chart:

 Blackday Forex chart

 
Note also that  threatening bearish divergence between price action and momentum is  evident on daily charts, but weakness below 114.61, the low from Oct 25 is  necessary for confirmation that would more objectively define a high and  provoke a larger-degree setback with respect to the advance from 108.76. 

However, in lieu of 114.61 price action and certainly while Oct 26's  116.24 former
resistance level remains intact, the trend remains bullish,  with scope for extended
gains towards the reactionary high from Sep 8,  2003 at 117.74, but with scope for
118.43, the 50% retracement of the  135.18 to 101.67 decline thereafter.

PS I often find that when a trader has posted his posiiton in the public  domain, stubbon
mindedness will prevent him from changing that view.  It's  fine (read necessary) to
change one's mind but never the case to trade  against trend.  In that respect, there are
not tops or bottoms to call -  ever.

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