The pick of the day is NOT EUR/USD because even though we had the ECB rate decision yesterday, the Ukrainian crisis could add unnecessary volatility to the movement’s of Mr. euro, which is not ideal for a long-term trader like myself. Instead we are looking at USDJPY who seems to be a bit more predictable at the moment. As we predicted the pair’s downward movement on the daily dance floor was held at the 50% Fibonacci level and though it tried again to approach the level yesterday, it was stopped at a spinning top romantic candle pattern followed by a very bullish candle during the Japanese session last night and throughout this morning.
On the weekly dance floor we are still waiting on wave 5 of the impulsive Elliot waves to form, as the pair remains under consolidation, above the Ichimoku cloud.
– Our bullish targets are at 102.024, 103.339 and 105.414.
– On the other hand if the pair breaks below 100.978, we could see further drops down to 99.948.
To explain how the Ukrainian crisis is effecting the markets, Russia’s leading stock index ended up more than 11% down yesterday and a reported $7bn was spent by Moscow trying to prop up the falling Rouble. As well as heavy buying of the currency by the central bank, they also raised interest rates by 150 basis points in a bid to make holding the currency more attractive. The fall in stock markets was led by oil and gas heavyweights, that investors feel are likely to be the first, ad most deeply, affected by and sanctions or fall in demand as Europe searches elsewhere for its natural resource imports.
The fall in stocks wasn’t only limited to Russia. A lot of European companies that have interests or operations in Russia were hit hard, particularly the banking sector. Just this morning an order from Mr Putin for troops out on ‘exercises’ in Crimea to return to their operating bases has meant a small reversal in the overnight ‘flight to quality’, but obviously everyone is still nervous.
Ukraine have asked the IMF for $15bn in rescue funding. The Ukrainian interim government asked for the funds on day one of a ten day visit from the IMF. Apparently Ukraine want a two year loan, just like a previous bailout program which was halted back in 2011 by the IMF though, as Ukraine failed to meet key conditions of the package. It is thought that whatever is agreed in the coming days will likely have stringent conditions attached, but continuing to stick to them could prove tricky as a new government is inevitable.
Stay tuned for more updates and if you feel like you’re lost in translation with this report, come one over and check out our straightforward and easy education program.