KRUGER INSIGHTS WEDNESDAY, JANUARY 22, 2014

By: Joel Kruger

Yen Will We See A Rally? - It has been a quiet week for me so far and really not a lot going on. Right now, it looks like the best opportunity out there might be another NZD/USD sell, on a rally towards 0.8400. Not sure if we get there, but if we do, I really like the idea of fading the move. The US Dollar continues to retain a strong bid tone, and although the buck has been consolidating in recent trade, the underlying price action suggests this is some sideways trade ahead of the next upside extension. The only exception I am considering at the moment is the Yen, where I continue to look for this currency to put in a nice short-term rally (ie USD/JPY lower) before the prevailing trend takes hold and we see some renewed Yen depreciation. I would love the chance to buy USD/JPY on a dip just below 100.00 over the coming days. I think it can happen, but we will have to keep our cool for the time being. 

Be Patient - On a similar note, the US equity market is still having a very hard time accepting the need for a more significant corrective pullback, and the ability for this market to remain so well bid each and every time it looks like it is finally ready to relent, has been nothing short of amazing (and a little unnerving). Generally, I think the trick right now, with not a lot going on, is to stay very disciplined and keep to the sidelines until the next good trade comes knocking at your door. No point on forcing anything just because you feel you need some action. This type of trading always has a way of backfiring. Moving on, for any of you out there watching GOLD, this market has remained very well capped ahead of key short-term resistance just shy of $1270, and the latest bearish reversal could be setting the stage for the next major downside extension below critical support at $1180. But the key point here is that although we may have been seeing a bit of demand for the yellow metal in recent days, the GOLD price would have to rally back over $1270 at a minimum to alleviate immediate downside pressures. Until then, even the short-term trend favors a resumption of weakness.