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360-289-9441(March 26, 2000) CURRENCIES: CANADIAN DOLLAR--While the Dollar Index was getting clobbered in Friday, the June Canadian Dollar rose strongly by 22 cents to .6813 showing a nice recovery from Thursday's low of .6783, closing at .6846 with good upward momentum. Stochastics were very positive; moving averages lagged and showed a bearish influence. Direction and momentum indicators shows us where the CD has been; bearish in all time frames for both indicators. Very low volatility. Bearish, but with a bounce.
SWISS FRANC--June Swiss Franc breached the upper trendline on a closing basis, but barely, Friday, to signal a change in trend to up in our book. If you connect the highs of October 15, January 5-6 and February 22 and intersect with Friday's price bar you will agree that something is afoot. Stochastics have been up for a while, March 15th; they are still in bullish territory and RSI is at 66% for the 9-day formula. Direction and momentum indicators are bullish for the short and intermediate terms and only momentum is bearish for the long term. 9- and 18-day moving averages just crossed to the "buy" signal. In three days, between Wednesday and Friday, prices went from .5995 to .6208 Friday. On a closing basis they rose by 173 points Thursday and Friday. That was enough to scare away four weeks of profits to "shorts" and stop-out a few speculators. But no complaints, although this downtrend is not as well formed as last year's, it has been persistent since last fall. Down.
JAPANESE YEN--Despite the small upward correction taken by the JUNE YEN on Friday, the downtrend continues. Trends are always caught in the
semantics of the time-frame used by the "definer." In my case, I use the daily charts and the last ten trading days to strongly influence my "directional call." When the trading channel is clearly defined, that is an even stronger influence, but when the trendline is steep, as it was with the Yen from late February to mid-March, then trendline analysis "gets thrown out the window." "Trendsetter's" call is still bullish despite the strong fall-off; despite the fact that prices on a closing basis have fallen through the 18-day moving average--I would call that a third indicator of trend. Stochastics are in the sell zone in all time frames; 9- and 18-day moving averages are still bullish though, a lagging indicator coming together at last to reflect the last 10 bars. Momentum and direction indicators in the short term are down; in the intermediate and long terms are up. There is always the concern that this might be a serious retracement, but of short duration. I am inclined to think that the rally recently was the correction of the longer downtrend and this is a return to the former and better defined channel...which began on January 3rd as the NNw year's trading began.
Actually, prices bounced quite a bit this past week, moving relatively mildly between 9555 and 9410, Monday to Thursday. In any good downtrend, the high is always set on Monday and low made Friday. Friday, as mentioned, saw a modest correction, as the Dollar Index got slammed by economic news and equities. Cross-rates, of which the yen is but one, surged higher, but not dramatically. Traders looking for a one-day correction have one to work with Monday. Down. By the way, as a closing note, 14-day stochastics was a particularly good indicator these past five weeks, since the break higher at the end of February; right on target.
Martin B. Miller
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