Japanese Yen: USD/JPY (JPY=X) continues to strengthen as short-sellers begin to pare positions
The Dollar/Yen is posting a slight recovery early Wednesday, following a combined steep sell-off the first two sessions of the week. The price action indicates a slight divergence from the major U.S. stock indexes, which could be a sign of a possible short-term bottom. Nonetheless, the overall driving force in the market will be risk aversion.
Today’s divergence from the stock market may be an early sign that concerns over a stock market crash may be softening. If this is the case then look for the USD/JPY to continue to strengthen as short-sellers begin to pare positions in preparation for a possible reversal to the upside in U.S. stock indexes. While this chart pattern will not necessarily indicate a change in trend is taking place, a sudden shift in momentum to the upside by the equity markets could trigger a strong short-covering rally in the Forex pair.
Look for the Dollar/Yen to continue to lose ground if another rapid swing to the downside by the U.S. stock market leads to another plunge in U.S. Treasury yields.
Fundamentally, Trump is likely to continue to blast the Fed and its Chairman Jerome Powell, but keep in mind that he cannot fire the Fed chief. I don’t know why this has become an issue as of late because Powell is essentially untouchable.
Mnuchin’s call to the major banks should be a concern because it brings back memories of the credit and liquidity crunches from 2008-2009. Wall Street wants to know why the call was made in the first place. Some bears thing it was a preemptive move to make sure banks have enough cash available in case of a stock market meltdown.
As far as the partial government shutdown is concerned, The U.S. Senate and the President could be expected to be deadlocked until January 3 when Congress reconvenes.
Overall, the bias in prices is: Sideways
By the way, prices are vulnerable to a correction towards 112.23.
The projected upper bound is: 112.44.
The projected lower bound is: 109.90.
The projected closing price is: 111.17.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 1 white candles and 9 black candles for a net of 8 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 42.1991. This is not an overbought or oversold reading. The last signal was a buy 1 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 38.63. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 1 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 -60. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.160 at 111.190. Volume was 96% below average (consolidating) and Bollinger Bands were 82% wider than normal.
Open High Low Close Volume___
111.360 111.380 111.170 111.190 4,896
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 111.69 112.84 111.00
Volatility: 10 7 7
Volume: 91,746 113,626 106,653
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.
FOREX JPY= is currently 0.2% above 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 14 periods.