Day two: selling Japan 225

Yesterday I looked at selling the Japan 225 cash at 14,135, around the neckline of the head and shoulders pattern that has now completed on the weekly chart.

I am adjusting my limit level slightly on the risk that we see a slight squeeze higher in the index and now look to short the index at 14200. This is a level which I think should cap rallies in the index.

As expected the index rallied from oversold conditions, hitting a high mid-point of 14,146, which when adjusted for out-of-hour spread, gives a high sell price of 14,116. Thus the position has not been filled yet.

It’s interesting to see that USD/JPY has found reasonable buyers, hitting a high of 102.01 on the back of good US retail sales. Good resistance is seen a 102.40 (the 38.2% retracement of the 104.14 to 101.32 sell-off through April), so a break of this level should see the index rally to my limit. I remain long USD/JPY as a trade idea for a move to 103.00 from April 9.

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