KRUGER INSIGHTS THURSDAY, JANUARY 30, 2014

By: Joel Kruger

Wait For It - I know there are many of you out there who might be thinking now is a great time to buy USD/JPY. The market is clearly in a very well defined and intense uptrend, and this latest setback is just a fantastic opportunity to jump into a long. While I do agree with the idea of buying a USD/JPY dip, I would still recommend waiting. The fact is, there is still a very strong correlation between USD/JPY and US equities, and with stocks looking like they could head a good deal lower in the weeks ahead, this does not bode well for USD/JPY. I have said that at some point I believe there will be a divergence between USD/JPY and US equities, but I don't think we are there just yet. If however you want to argue that equities have bottomed and this is why USD/JPY should bounce, I don't have much to say. I just don't believe this equity pullback is complete and still think we have a ways to go. So what am I looking for? Well, I am looking for a pullback into the 99.00-100.00 previous triangle resistance now turned support zone. Once we get down there, I think the idea of buying will become a lot more attractive. And even then, I wouldn't jump right in and buy, I would be looking for daily studies to be well oversold and for intraday studies to also be well stretched. At that point, wherever it may be, it will finally be a good time to buy USD/JPY.

Still Hiding - Perhaps I am being overly cautious with this one, but as much as I want to be in the trade, I won't force it. Now is it possible that from now into the end of the week we see a supported USD/JPY market? Absolutely. Considering how pressured stocks have been and how much of a mess emerging markets are in, it is entirely possible that we see a bit of a relief rally. But my expectation from here is that any USD/JPY rally is well capped ahead of 103.50. What else am I looking at right now? Kiwi has finally started to move and it is nice to see the currency come off after anticipating such underperformance. I would look for NZD/USD to soon take out some key support at 0.8085 in the sessions ahead. The only market on my radar that has yet to respond to all that is going on is the Shekel. Despite this latest wave of global uncertainty that has plagued the markets, the Israeli Shekel has managed to more than hold its own and is virtually unscathed. Still, the powers of cyclicality can not be ignored, and I suspect that at some point very soon, we will start to see a sell off in the Shekel. I am looking for any USD/ILS setbacks to be well supported ahead of 3.40, with an upside objective of 3.80 in the months ahead. Finally, for any of you contrarians out there, it might be worth looking into a short-term long CAD position. Maybe you want to sell EUR/CAD, maybe you want to sell GBP/CAD, maybe you want to sell NZD/CAD, or maybe USD/CAD straight up. Whatever the case, this could produce some nice returns over the coming sessions.