Forex Trading Strategy Update

April 1, 2014 with Vito Henjoto

Hey good morning everyone. This is Vito Henjoto, Senior Technical

Strategist at Invast Financial Services. Today’’s the first of April 2014.

No April Fool�’s joke this time around. Let�’s just focus more on the currency

front. I do want to focus more on AUD here. We have a lot of data coming

out today. We have the [Indiscernible] survey coming in at 10:50 a.m.,

which is now 50 minutes to go, and then we have the RBA rate decision.

Between those two, we actually have the Chinese manufacturing data to

come out.

There�’s a little bit of a talk about how China is. The PBOC is likely going to

be, doing more stimulus for the Chinese economy. That�’s still old talk. We

have not anything as of yet. The only consideration I have is that traders

might have already priced in that, the potential stimulus into the market.

The other thing that I need to bring up is what if the manufacturing data

comes out as lower than expected?

The market could take that as a sign that stimulus is going to be coming,

and it could actually be pushing the AUD rate higher, so we need to see

what’’s going to happen there. The manufacturing data is definitely going

to be a market mover, but right now, the AUD/USD which is what we’re

going to focus on today, i’s still range bound between 9225. This is what

we talked about yesterday, and actually bounces off from 9225. We still

have resistance at 93, NBO 93, we have 9350 --- so, still range bound. I

do suspect that we are likely going to be seeing a break out very soon.

Any upside break above 93 is likely going to be very limited. Take a look at

the momentum here on the Stochastics. Prices are already trading above

the 80 level. If it dips down below the 80 level then it’ll be overbought and

there�’s a high chance we could see a further drop to the downside.

Just to get us prepared for that, take a look at the Ichimoku Cloud here,

and see how the Ichimoku Cloud has shifted to a more neutral stance

instead of rising up. It’’s actually turning bearish right now. You can see the

color change here on the Ichimoku Cloud. This [Indiscernible] has actually

already crossed over, so, support right now, this is where it goes flat here.

That�’s about 9250 – 9255. If price manages to actually close down below

9250 – 9255, then it’ll take it back below the Ichimoku Cloud. It’s likely

going to be triggering for selling on the AUD/USD, and I’’m still maintaining

that the bias we’re still bearish as long as the price is trading below 93.

Then the concern is if it does break above 93, we have resistance at 9350,

and take a look at the momentum there, is going to be overbought very,

very soon. So I’m just at 9350 in here just in case if it does break above it,

then that would be the next key resistance to watch out for.

Do we expect the daily close at above 9350 at this point in time? Probably

not. Momentum wise it�’s a little bit top-heavy for the AUD/USD. For now,

you have two options, to trade within the range or you can go short, have

a stop loss above 9350. But then it�’s not really ideal at this point in time

because of the high risk. Economic data is coming out.

So, I would say just hang on tight a little bit more and wait until at least the

Chinese data comes out. RBA is going to be releasing their interest rate

statement at 2:30 as per usual. We don’’t expect any interest rate hikes or

interest rate cuts at this point in time. I think RBA is pretty stable and pretty

neutral on the stance of the interest rate. I think there’’s going to be no

change for the interest rate. What’’s important is what comes up after the

interest rate is released. The interest rate statement is probably going be

more important. What the RBA says about the strength of the AUD is

going to be the key to what traders are going to be looking for. So, a lot of

key events today for the Australian dollar here, and that’’s where our focus

is going to be.

Let�’s take a look at the AUD/NZD here. The AUD/NZD --- we have

resistance at 1.0690 to 1.07. As you can see here, that’’s where the

Ichimoku Cloud is located. I think this is also the level that we talked

about last week on where the potential resistance for the pairs is going to

be. It’s basically going to be between 1.07 to 1.08 . Right now, take a look

at the Stochastics here. This is actually turning down. Ae we going to be

seeing further drop to the downside? A little bit unclear as of now, because

the Ichimoku Cloud, as I mentioned before is pretty stable. It’’s actually

pretty flat. The Cloud has changed color to a negative as well. So are we

going to be seeing that rejection happen intraday wise or is it going to be

next day or so? It could happen. It could very well happen and we have

momentum to actually go down, and support at 1.0550 would be the next

critical support level where the pair is likely going to head to if it does go

down at this current price level here. So 1.07, 1.0690 --- that�’s the key

resistance intraday wise. As long as this level is not surpassed by the

currency pair then our bias right now is to the downside because prices

trading below the Ichimoku Cloud. We just got a rejection from the

Ichimoku Cloud and take a look at the Stochastics here, momentum is

about to turn to the downside as well.

Now the AUD/JPY, this one is slightly different. There’’s a little bit more

negative bearish turn AUS/NZD from a technical point of view but the

AUD/JPY is really strong to the upside. We do have a couple of trend lines

that’s really holding the pair up. One of them is actually this one here and

the other one is actually a little bit steeper and that would be that one over

there. So, even if it does break below this support trend line number 1

here, we also have another support trend line here. That really keeps the

base right around 9450 or previous 100 percent retracement here. That�’s

definitely going to be the key level to watch out for. In terms of upside

movement, there’’s a high potential.

This could actually shoot up even more to 96 and 9650. We do have a

weekly 50 percent at about 9580 level, but intraday wise on the four hourly

timeframe on the daily timeframe. We’’re looking at the same Fibonacci

here, and there�’s a high chance this could actually go up to 9650 on the

AUD/JPY before we see any exhaustion in momentum. So, keep a close

eye on the AUD/JPY. If you’re still long on the AUD/JPY, you might want to

move your stop loss to break even just to lock in some profits here. It is

looking a little bit more exhausted but we have enough momentum likely to

push up towards 9650, so keep a very close eye on the AUD/JPY.

Since we�’re talking about the Japanese Yen, its worth mentioning the

USD/JPY here actually managed to close above the Ichimoku Cloud on

the daily timeframe, and take a look at that; it’s actually trading above 103

as well. Key resistances are taken out, and take a look at this trend line

here. This was actually broken.

Also, keep in mind, we have enough momentum for this push up even

further. The big question is: how far up can this go? Take a look at the

Fibonacci retracement here of that fall, and100 percent is coming in very

quickly at 103.75. That’s resistance number one. Beyond that, we have

104.43. Range is not going to be massive or anything like that, but do

keep in mind we do have enough momentum to push up. But are we going

to be seeing that push higher today? We need to take a closer look on the

hourly timeframe here and the other timeframe. Take a look at the

[Indiscernible] when it crosses over like that. It means it�’s a little bit

overbought so we might see a little bit of a pull back, or if not, price

stabilizing record on the 103 to 102.80 levels. Basically between this zone

here we can see price stall basically just right here on 103 to 102.80 right

over there.

Overall I�’m still bullish on the USD/JPY. It might be a good point to jump

into the USD/JPY if it pulls back down to 102.80. It was kind of significant

like right here. So, 102.80 to 103, I think that’’s a good buy zone for the

USD/JPY. Momentum is still to the upside. Ichimoku cloud still trading to

the upside on the hourly timeframe, the four hourly time frame as well as

the daily time frame here.

Overall, I’’ll shoot another video after the RBA release their statement and

I’’ll update on the AUD/USD, if there’s any trade on the AUD/USD. I’ll

definitely be talking about that on the video, if not, I’’ll update it via Twitter

as well. So good luck with your trades today, and keep in mind, there’’s

that Chinese data coming out, at 10:50 in Japan and also the RBA rate

statement at 2:30. So good luck with your trades.

Get more of Vito’s insights here - www.youtube.com/InvastInsights