Trading Setups / Chart in Focus:

EURJPY

The EURJPY exploded higher today as the inside bar strategy from Friday broke to the upside. Price did recoil a bit into the NY close, but we still saw a substantial gain today in the EURJPY as Japan intervened in the currency markets to weaken the yen.

Note the fakey with pin bar setup that occurred last week off dynamic support. Many of our members’ traded these setups and they were discussed heavily in the forum over the last week.

USDJPY

Japan intervened in the currency markets today to weaken the surging yen. The daily chart below is pretty interesting. We can see price is essentially in a longer-term trading range between about 80.00-79.50 and 76.00. Price will likely stay contained within this range in the near term, so we can use the boundaries of the range to watch for price action signals.

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Forex Commentary:

In the currency markets today, the EURUSD lost over 2 percent on the back of widespread pessimism over Europe’s ability to contain the region’s debt crisis. The EURUSD hit a low of $1.3827, and closed around $1.3855, down about 2 percent on the day.

The Japanese yen lost significant ground against all the other major currencies today as Japan intervened to slow the surging yen. However, analysts noted that more action might be needed to for a longer-term weakening of the yen.

The U.S. dollar gained ground against all the other majors today on the back of widespread risk aversion as global markets fell on the back of renewed worries about the euro-zone debt crisis. The U.S. dollar index gained 1.4 percent today.

Other Markets:

In the U.S. markets today, stocks lost ground on the back of new fears about Europe’s debt problems and the failure of MF Global Holdings Ltd, a trading firm.

The Dow lost 276.10 points, or 2.26 percent, the S&P 500 dropped 31.79 points, or 2.47 percent, and the Nasdaq dropped 52.74 points, or 1.93 percent.

Upcoming important economic announcements: 11/1/2011

3:00am EST: Britain – Nationwide HPI m/m
1st-4th: Britain – Halifax HPI m/m
4:15am EST: Switzerland – Retail Sales y/y
5:30am EST: Britain – Manufacturing PMI
5:30am EST: Britain – Prelim GDP q/q
10:00am EST: United States – ISM Manufacturing PMI
8:30pm EST: Australia – Building Approvals m/m