Japanese Yen: USD/JPY (JPY=X) demand for risky assets should also be stronger

Japanese Yen: USD/JPY (JPY=X) demand for risky assets should also be stronger

Japanese Yen: USD/JPY (JPY=X) demand for risky assets should also be stronger

I expect the initial reaction to the news to be bullish for the Dollar/Yen. I’m expecting firm U.S. Treasury yields which should drive up demand for the U.S. Dollar. Demand for risky assets should also be stronger.

Whether the rally in the USD/JPY and the other markets continues much beyond the potential initial spike to the upside in prices will be determined by how concerned investors are about the chances of an actual deal to end the trade dispute between the economic powerhouses. The stronger their convictions, the higher prices should rise.

There are no major reports from Japan this week, but investors will be locked in on Friday’s U.S. Non-Farm Payrolls report. A bullish report could encourage the Fed to hold rates steady at their meeting in late July and this could be bullish for the USD/JPY.

Watch the volume and volatility this week because Thursday, July 4 is a U.S. bank holiday. This could skew the price action especially if investors decide to take to the sidelines until Monday, July 8.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 109.21.

The projected upper bound is: 109.20.

The projected lower bound is: 107.13.

The projected closing price is: 108.17.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 5 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 28 black candles for a net of 8 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.

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 83.8783. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 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 47.29. 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 3 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 42. This is not a topping or bottoming area. The last signal was a buy 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 buy 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.360 at 108.240. Volume was 95% below average (consolidating) and Bollinger Bands were 20% narrower than normal.

Open High Low Close Volume___
108.090 108.290 108.090 108.240 4,267

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 107.72 109.38 111.00
Volatility: 6 6 7
Volume: 83,230 87,971 99,428

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= gapped up today (bullish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FOREX JPY= is currently 2.5% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 40 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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