If a market ever needed a GPD unit, today’s market is in desperate need. You’ve got one camp looking for China to turn the global tide, another group latching onto some tentative signs that the US decline is beginning to bottom…With any luck they will both be right and the markets will embrace risk in a sustained way. At the moment when traders feel a little frisky they buy a little cable and then run for the hills the first time the rally sputters.
The net result of all this are markets that move in fights and starts without a tremendous amount of conviction.
In these markets, range extensions are the greatest risk; near-term I’d not be surprised to see USD/JPY edge through resistance at 99.50/55 just far enough to trigger stops before flopping right back into its 98.50/99.50 range. That pair trades now at 99.30.