Japanese Yen: USD/JPY (JPY=X) bearish with short-term outlook

Japanese Yen: USD/JPY (JPY=X) bearish with short-term outlook

Japanese Yen: USD/JPY (JPY=X) bearish with short-term outlook

The anti-risk Japanese Yen and Swiss Franc outperformed against their major counterparts as Wall Street wrapped up its worst week this year. While the S&P 500 dropped nearly ¾ of a percent on Friday, it was European benchmark stock indexes that fared the worst. The Euro Stoxx 50 and DAX tumbled 3.26% and 3.11% respectively.

The source of anguish in financial markets stemmed from an escalation in US trade tensions with the world. Markets were digesting intention from President Donald Trump to slap an additional $300b in Chinese import tariffs on September 1. Meanwhile across the Atlantic Ocean, European markets were trembling ahead of Mr Trump’s statement on EU trade.

It turned out that President Trump signed an agreement to make access for beef exporters to the EU easier. Shortly afterwards however, he added that EU auto tariffs “are never off the table”. Some of the worst-performing majors were the pro-risk Australian and New Zealand Dollars. The US Dollar had a mixed session, falling against JPY and CHF, but doing better against AUD and NZD.

In this case, trade war fears worked to overpower market reaction to Friday’s US jobs report. It was a mixed bag with the country adding fewer jobs than expected as unemployment rose, but wage growth saw an uptick alongside labor force participation. The markets are now fully anticipating another Fed interest rate cut in September to help offset the consequences of higher taxes consumers may expect from the tariffs.

Technical Analysis

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 108.52.

The projected upper bound is: 106.77.

The projected lower bound is: 104.24.

The projected closing price is: 105.50.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 24 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 3.2481. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 27.26. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 29 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -190.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.360 at 105.580. Volume was 93% below average (consolidating) and Bollinger Bands were 54% wider than normal.

Open     High      Low     Close     Volume___
105.930 106.000 105.510 105.580 6,015
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 107.70 108.07 110.36
Volatility: 9 7 7
Volume: 78,605 86,563 95,090

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX JPY= is currently 4.3% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 1 periods. Our momentum oscillator is currently indicating that JPY= is currently in an oversold condition.

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