Sense of risk. What an important factor in the financial world! The power of fear and greed clashes in the markets every day. If big moves happen and money flies everywhere, some tools can give clues as to whether market participants are afraid or greedy.
You see, when investors are hungry for returns, they don’t like to fool around with tools that don’t provide good returns. Like the Japanese yen and the Swiss franc. These currencies do not bring high interest rates and are a safe haven. The same counts for gold, which is a popular tool in times of political and economic uncertainty. Let’s not forget the US dollar, which many consider a safe haven, although it usually does not respond with the same intensity to risk aversion as the Japanese yen.
So what do investors buy when they reach a return? Well, many different instruments offer better returns, such as gold or the Japanese yen. Investors often buy stocks when they are looking for a higher return on their investment. When money is spent on stocks, they often sell lower-yielding, safer assets than the Japanese yen to free up the funds they need to buy those stocks. Other higher-yielding assets include high-interest currency pairs. By buying these against lower-yielding currencies such as the Japanese yen, investors earn interest for every day they hold the position. This is called. This brings us to our first instrument and lesson today. Let’s look at USD / JPY:
USD / JPY – ready to go higher again?
The USD / JPY has been on a lower trend for some time. However, today’s sale of the Japanese yen bears need to take note of. Today’s strong daily candle poses a threat to the bearish structure of the currency pair. Although the pair still shows a declining trend in the short term, the 200-day suggests that the pair is an when looking at the bigger picture.
health , you don’t want to see the type of candle we saw today, and you don’t even want to see such a shallow angle in the trend. Another thing to note is that we see a lot more red candles than blue candles. With a strong declining trend, most candles will turn red, indicating that strong sales are present and that the bears are firmly in control. Currently, we are not seeing this quality and we are seeing more and more bullish candles. Bears need to be careful here.
The first thing we should not forget as a trader is that we cannot afford to “marry” a house in a certain direction bias. Of course, we need to define the trend and the direction of trade. But we need to be alert to structural changes in the market and get rid of our bias as soon as there is enough evidence that the trend is over. Novice traders often cling to their belief in a financial instrument until they lose a lot of money, instead of adapting to dynamic market conditions like a pro. Am I saying that the downward trend in USD / JPY is over? Not necessarily; but it monitors the structure of this trend.
Here is a weekly chart, just to provide an additional perspective:
Here we can clearly see that the long-term trend is rising and the price is above the 20 EMA and 200-week moving average. The short-term downward trend seen in recent weeks is merely a correction of the larger bull trend. Let’s see if this pair is above the 20-week exponential moving average, and if it can make some more progress in the coming weeks.
S&P 500 napi diagram
Going back to the whole mood theme, I noticed this afternoon that when the Japanese yen started to sell aggressively at around 3pm, the S&A P 500 and other stock indices started to rise quite impulsively. This shows how risk sentiment has affected today’s cash flow. We have also seen a sale in Swiss francs and gold, which, as I mentioned earlier, are both safe havens. So safer assets have been replaced by riskier, higher-yielding assets.
About the S & P 500 – the strength and durability of this trend is just phenomenal. The second thing we should never forget is trading with the trend. The trend is your friend. This is the single most important principle in trading financial instruments! You could have bought the St & P 500 at any time in the last few decades, and today you would have been profitable if you just stuck to your position. In addition, the last few weeks have offered fantastic trading opportunities. I hope you used my trading tip on January 31st when I wrote about buying the S & P 500. Here is a link to the article: Backs while Equities Adjust . That would have been a great benefit to you. I am still in the long position mentioned in that article. The bull trend is really healthy, so I’m in no hurry to take my profits right now. My stop loss, of course, paid off. I will definitely be looking for more shopping options at S-en & P in the coming days.
This brings us to the end of today’s analysis. Remember to adapt to changing market conditions and trade in the direction of the prevailing trend. You can make a lot of money out there. Let’s make it!
Good luck with the merchant guys!
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