Japanese Yen Bandwidth Narrows as FOMC and BOJ Steer Policy

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1 Thursday May 21, CALLS AND SIGNALS The U.S.-German 10Y spread remains in a medium-term uptrend, but a close below 150 basis points would raise the scenario that the core trend has at least shifted from up to sideways, and potentially also herald the beginning of a more important reversal process, Credit Suisse technical analysts led by David Sneddon said in a note. A close below 150 basis points would set a target of 140/138 basis points, then 130 basis points (the spike low from mid-january). A close above 176 basis points is needed to bolster the view that the recent weakness is a correction within the broader widening trend, the analysts said. U.S. Treasury yields are "trying to top out," Bank of America Merrill Lynch technical strategist MacNeil Curry said in report. Evidence includes head-and-shoulders tops forming since early May against significant support for the five-year at percent and the 10-year at to percent, Curry wrote. For the 30-year the topping pattern is not as well defined. GBP/USD may revisit the current session low of going into New York trading and ahead of the release of FOMC minutes as the hourly chart forms a bearish "shooting star" formation and the 13-hour RSI moves back to neutral from oversold conditions yesterday, strategist Sejul Gokal wrote this morning. INSIDE TECHNICALS WHEAT: Paul Ciana charts the commodity in four currencies and sees the rally facing resistance. EURO: Akshay Chinchalkar applies the Vortex Indicator to the euro and sees a crossover into a bearish trend. GUEST COLUMN: John Logan of TAS Professional charts the EURUSD and gauges opportunities to short the euro. GLOBAL TRENDLINES: Alex Cole sees most major sovereign yields testing resistance or breaking out, with euro-zone bonds leading the way, having broken out of a downward channel. Japanese Yen Bandwidth Narrows as FOMC and BOJ Steer Policy BY GREG BENDER, CMT, BLOOMBERG TRADEBOOK They say volatility is mean-reverting, and that is exactly what is happening in one of the world s busiest currency pairs, USDJPY. Bollinger Bands measure price volatility by using bands drawn two standard deviations around the 20-period moving average (the settings are configurable). During periods of high volatility, like when USDJPY rallied from a low in February 2014 to in December, the width of the bands widens. During periods of low volatility, like the current trading range, the width of the bands narrows. The USDJPY bands reached their narrowest point late last week and are starting to widen as the U.S. dollar is rising against the Japanese yen. Bollinger Band width is relative what is wide in USDJPY may be average in the dollar/turkish Lira pair (USDTRY), for example. Despite the market mantra that Source: Terminals users may click on the image or run G BBTA 761 to see a live version of this chart. volatility is mean-reverting, periods of low and high volatility can last longer than expected. For USDJPY, there are important FOMC and BOJ data releases this week. Time will tell if the news can move this currency pair outside its Bollinger Bands. Greg Bender can be contacted at gbender1@bloomberg.net. Click here for disclaimer.

2 May 21, 2015 Brief Technical Strategies 2 COMMODITIES BY PAUL CIANA, CMT, BLOOMBERG APPLICATION SPECIALST Wheat Rallies and Faces Resistance Across World Currencies Source: Terminals users may click on the image or run G BBTA 759 to see a live version of this chart. Charting and analyzing wheat futures priced in different currencies shows wheat is facing significant resistance at multiple moving averages. India has been increasing its wheat imports from Australia. This could be one reason why wheat priced in rupees appears to be leading the global trend, having already broken through several resistance levels on Monday. The chart above displays five charts of the continuous front month wheat future that trades on the Chicago Board of Trade. The top panel is wheat priced in U.S. dollars. The second panel is wheat priced in euros, followed by Australian dollars in the third and Indian rupees in the bottom panel. Each chart has the 50-day (magenta), 100-day (green) and 200-day (blue) simple moving average applied. Wheat priced in USD broke support (red line at 474) in early May, although it did not test support in the other currencies. Shortly thereafter the rally began. Wheat began this week to test resistance at the 200-day moving average at On Monday, it rallied at the New York open, breaking the 100-day moving average and briefly trading above the 200-day moving average. Wheat priced in EUR is above its 200-day moving average and is testing resistance at the 50-day and 100-day moving average lines. The 200-day moving average has a positive slope and the 50-day is turning up, suggesting additional strength may be present in this rally. Wheat price in AUD paints a similar picture as in EUR, though only the 100-day is present as resistance. Wheat priced in rupees has broken above all moving average resistance levels. Its key resistance level is rupees, which is the February intraday high. This week's strength has led to wheat trading above the April closing high of rupees. A confirmed break of resistance would form a technical price pattern suggesting wheat could trend to about 380 rupees. Paul Ciana, CMT, can be reached at pciana@bloomberg.net

3 May 21, 2015 Brief Technical Strategies 3 FX BY AKSHAY CHINCHALKAR, BLOOMBERG APPLICATION SPECIALIST Euro Turns Bearish, Vortex Indicator Shows Source: Please contact author for a copy of this chart and the Vortex study required to view the annotations. The euro has turned bearish this past week, according to the Vortex indicator. This indicator consists of two oscillators and is aimed to capture both positive and negative moment to help traders time trend reversals or continuations. In capturing directional movement, the Vortex indicator compares the distance between the recent low and the next bar's high or that between the recent high and the next bar's low. The greater the difference between the former, the more positive directional movement there is. Conversely, the greater the difference between the latter, the more negative directional movement there is. The study uses a 14-bar period on the daily chart of the EURUSD. Buy signals on the chart are triggered when the positive directional movement line crosses above negative directional movement line, and vice versa. If the positive directional movement line exceeds 1, the trend is considered bullish, and when the negative directional movement line exceeds 1, the trend is considered bearish. Additional filters may be used to minimize whipsaws. When the positive DM line crosses above the negative DM line, the high of the trading period bar becomes an entry point. Assuming that the positive DM line is still above the negative DM line, one will enter only if this high is taken out. If the negative DM line crosses back above the positive DM line without filling our long order, the long order is canceled, effectively helping the trader avoid a whipsaw. The rules are exactly opposite for a sell signal on the day that the negative DM line crosses above the positive DM line, the low of the bar becomes the short entry price. Again, if the order is not filled as the positive DM line then goes above the negative DM line, the order is cancelled. Akshay Chinchalkar can be reached at achinchalka1@bloomberg.net

4 May 21, 2015 Brief Technical Strategies 4 GUEST COLUMN JOHN LOGAN, CEO, TAS PROFESSIONAL EURUSD Long-Term and Medium-Term Resistance Reopen Short Side Opportunities The EURUSD is at a critical area on our weekly and daily charts. The inflection points provided by our TAS Pro Dynamic VAP coupled with directional support of TAS Navigator signal it may be time to return to the short euro trade. TAS Dynamic VAP is a proprietary method to determine balanced and imbalanced areas by measuring volume-at-price. TAS Pro Navigator combines classic trend and volatility to provide potential exhaustion and reversal points. The current weekly chart of the EURUSD and the historical breakdown on July 2014 at is shown with the TAS Dynamic VAP. The power of this major trend change is highlighted by the coinciding long-term zero crossover in TAS Navigator, shown in the lower panel. During the subsequent downtrend we have not experienced any long-term violations of the weekly TAS Dynamic VAP highs. Even though in the last three weeks our daily TAS Dynamic VAP highs were breached at the to range with TAS Navigator confirmations, this was only a warning sign against the long term trend down. We've been sitting on our hands patiently waiting for the pair to trade in the resistance neighborhood to give a maximum leverage point to ride the long-term trend down. With the current price action now confirming a rejection of that resistance and the piercing of daily TAS Dynamic VAP lows at , this down trend may continue to retest the lows of the year. John Logan is the founder and CEO of TAS Professional. Contact him at Weekly Chart Shows Strength of July Breakdown in EURUSD Pair Trade jlogan@tasprofessional.com. There are 15 free TAS Professional indicators available on the terminal, and high probability setups using TAS architecture are also available through a risk-free trial via the TAS Profile Scanner at APPS TASCAN <GO> Source: TAS on Terminals users may click on the image or run G BBTA 763 to see a live version of this chart. Daily Dynamic VAP Highs Confirm Weekly Dynamic VAP Highs as Strong Resistance Source: TAS on Terminals users may click on the image or run G BBTA LINK 762 to see a live version of this chart.

5 May 21, 2015 Brief Technical Strategies 5 TECHNICAL LEVELS The above table monitors major markets and contains conditions to alert you to look at your charts. The rules are as follows: Last price and %Chg (5) is green/red if positive/negative. 5dHigh/5dLow is green/red if the 5d high or 5d low occurred during the last 20 days. The 50d SMA and 200d SMA will be green/red if the 50d SMA is greater/less than the 200d SMA. The 50d vs 200d measures the percent distance of the 50d from the 200d and turns yellow if the percent is between -1% and 1%. ADX will read Trending if it s greater than 25 and Range if its less than 20. 2SD From 60 Day Mean will be red and read Bearish when price is greater than the +2SD and will be green and read Bullish when price is less than -2SD. RSI 9 will say OB/OS and turn yellow when RSI 9 is greater than 70 or less than 30. The Fibonacci section will highlight blue if the 1yr, 3yr or 5yr ratios are within +/-1% of 38.2%, 50%, 61.8% levels or between 0-1% of %.

6 May 21, 2015 Brief Technical Strategies 6 GLOBAL TRENDLINES The dollar holds at support while the British pound extends its breakout. Most major sovereign yields are testing resistance or breaking out. The euro-zone bonds lead the way, having broken out of a downward channel. Crude oil futures are trying to maintain their rally. The S&P 500 is barely holding at all-time highs. Alex Cole is a technical analysis specialist in 's analytics department. He can be contacted at acole9@bloomberg.net.

7 May 21, 2015 Brief Technical Strategies 7 CALENDAR Charting and Technical Analysis Events DATE EVENT FEATURING LOCATION CONTACT May 27, 17:00-19:00 Beginner MasterClass in.net Programming with C# A bimonthly series of intimate classes for beginners/intermediates with the goal of enabling you to program into, from Visual Studio through the CS.Net interface, with just a basic starting knowledge of C#. London Oliver Woolf at May 28, 12:30-13:30 TA Masterclass: RSI How to Use it & Improve it In this second session we will look at the RSI indicator: How is the RSI calculated? What is meant by the terms Overbought and Oversold? Divergence analysis. How to modify the RSI to make it more adaptive to trends. How to build your own studies based on RSI. How to backtest the RSI. Istanbul Oliver Woolf at May 28, 12:15-13:30 Intermediate Charting Workshop Learn how to create historical and intraday charts, create customized technical charts, draw trend lines and display personal annotations. Jakarta Ritesh Bagaria at rbagaria2@bloomberg.net May 30, 8:30-17:00 Introduction to Technical Analysis This full-day Saturday session aims to provide a good grounding in technical analysis to participants from all asset classes who are new to the subject. The session covers the essentials of technical analysis that can be apply for both short-term and longer-term analysis. After the session, attendees should be able to apply various technical analysis tools confidently in the markets they cover. Singapore Gregg Tan at greggtan@bloomberg.net June 2, 18:00-19:30 MTA Houston Chapter Meeting Fusing Economics and Technical Strategy, presentation by Application Specialist Paul Ciana TRAFIGURA, 5 Houston Center, Houston, TX Paul Ciana at pciana@bloomberg.net June 10, 9:00-12:00 FX Idea Generation: Volatility and Technical Analysis In this seminar Application Specialists Alex Wenham and Oliver Woolf will discuss FX options tools and technical analysis techniques for volatile FX markets. Tel Aviv Oliver Woolf at Brief: Technical Strategies Brief Managing Editor Jennifer Rossa jrossa@bloomberg.net Technicals Editor Deirdre Fretz dfretz@bloomberg.net Contributing Technicals Editor Paul Ciana, CMT pciana@bloomberg.net U.S. Contributors Greg Bender, CMT gbender1@bloomberg.net Alex Cole acole9@bloomberg.net William Maloney, CMT wmaloney3@bloomberg.net Tom Schneider tschneider7@bloomberg.net Latin America Contributors Andre Lapponi alapponi@bloomberg.net South Asia Contributors Akshay Chinchalkar achinchalka1@bloomberg.net Europe Contributors Eoghan Leahy, CMT, MSTA eleahy6@bloomberg.net Philip Sexton, MSTA psexton@bloomberg.net Oliver Woolf, MSTA Sales Contact Numbers US: EU: Newsletter Business Manager Nick Ferris nferris2@bloomberg.net Advertising Adrienne Bills abills1@bloomberg.net Reprints & Permissions Lori Husted lori.husted@bloomberg.net To subscribe via the Terminal click BRIEF<GO> or on the web at This newsletter and its contents may not be forwarded or redistributed without the prior consent of. Please contact our reprints and permissions group listed above for more information LP. All rights reserved.