Japanese Yen: USD/JPY (JPY=X) demand for risk will be the primarily driver of the price action
The Dollar/Yen finished lower last week, posting a potentially bearish closing price reversal top in the process. Most of the damage took place on December 2 and December 3. The Dollar/Yen hit a six-month high on Monday after an unexpected rebound in Chinese manufacturing activity raised hopes of a brighter outlook for the world economy.
The rally didn’t last long, however, as safe haven demand drove investors into the Japanese Yen after U.S. President Donald Trump said he would restore tariffs on some imports from Brazil and Argentina, while a drop in new U.S. factory orders in November to their lowest since 2012 deepened the decline.
The Dollar/Yen fell even further on Tuesday after U.S. President Donald Trump said a trade deal with China might have to wait until after the 2020 U.S. presidential election.
The Forex pair hit its low for the week after Bloomberg News reported, citing people familiar with the talks, that China and the U.S. were getting close to reaching a trade deal.
Demand for risk will be the primarily driver of the price action this week, but there are some domestic reports that should be watched. Traders may not be too concerned about the economic data, however, since the government said last week it was going to provide stimulus in the future.
The Japanese government approved 13.2 trillion yen ($121 billion) worth of public stimulus spending on Thursday, with the economy due for a total infusion of 26 trillion yen if private-sector and other outlays are factored in.
The package is meant to strengthen the economy against a possible cool-down period after the 2020 Tokyo Olympics and other risks such as the U.S.-China trade war.
Key reports out of Japan include Final GDP, Preliminary Machine Tool Orders, Core Machinery Orders, Tankan Manufacturing Index, Tankan Non-Manufacturing Index and Revised Industrial Production.
There was a lot of noise about a trade deal last week, but this is how the week ended.
Top White House economic adviser Larry Kudlow said on Friday that a December 15 deadline is still in place to impose a new round of U.S. tariffs on some $156 billion of China’s remaining exports to the United States, but the president likes where trade talks with China are going, he added.
China, however, countered with a threat of its own, with one Chinese official telling Reuters that China will implement its own tariffs as a countermeasure if the December 15 tariffs go into place, which may dash any chance of a near-term trade deal.
Risk surrounding a trade deal will be the best price driver this week.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 109.53.
The projected lower bound is: 107.77.
The projected closing price is: 108.65.
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 25 black candles for a net of 1 black candles.
A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with FOREX JPY=) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with FOREX JPY=) it is called a bullish hammer.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 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 21.9938. This is not an overbought or oversold reading. The last signal was a sell 5 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 47.32. 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 84 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 -74. This is not a topping or bottoming area. The last signal was a sell 5 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 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.050 at 108.640. Volume was 28% below average (neutral) and Bollinger Bands were 45% narrower than normal.
Open High Low Close Volume___
108.670 108.670 108.410 108.640 65,263
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 109.00 108.54 108.84
Volatility: 5 5 7
Volume: 82,096 87,709 89,732
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% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. 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 5 periods.
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