Japanese Yen: USD/JPY (JPY=X) indicates there are more optimists than pessimists
If investors are nervous about the lack of concrete evidence that the U.S. and China are making progress toward a trade deal, it’s not showing up in the financial markets early Wednesday. U.S. stock market futures are trading at new record highs, Treasury yields are inching higher, and the Dollar/Yen is rising.
If problems or risks were evident, traders would already be moving money into the Japanese Yen for protection. We’re not saying there aren’t any concerns. There may be, but today’s price action suggests they aren’t strong enough to derail the bullish investor sentiment.
The optimists are hanging on to the positive comments from Beijing and Washington. The pessimists are analysts who cite previous failures in trade talks as reasons to believe the two economic powerhouses are still too far apart on major issues to reach a trade deal over the near-term.
China’s Ministry of Commerce said Tuesday that negotiators from Washington and Beijing held another phone call to discuss how to “resolve core issues.”
Trump followed up by saying that the U.S. and China are in the “final throes” of reaching a trade deal.
Given the recent price action in the Dollar/Yen, most investors are probably siding with Tai Hui, chief Asia market strategist at J.P. Morgan Asset Management.
Hui told CNBC’s “Squawk Box” on Wednesday, “I do think that the trade deal is increasingly likely given…President Trump’s comments.”
“Both sides have incentives to push through at least this phase one,” Hui said. “I think going forward to phase two, phase three, that’ll be increasingly difficult but given where we are in the macro cycle, I do think that even the U.S. will have a strong incentive to at least not escalate this tension further.”
Worried investors are thinking more like Robert Carnell, chief economist and head of research for Asia Pacific at ING. He wrote in a note that markets “seem to be getting enured” to comments such as those from Trump.
“The fact that we have heard these positive comments so often but are still waiting for a deal could be interpreted as meaning that significant problems still remain,” Carnell said. “This may be more than just dotting the ‘I’s’ and crossing the ‘t’s.”’
Overall, the bias in prices is: Upwards.
The projected upper bound is: 110.38.
The projected lower bound is: 108.51.
The projected closing price is: 109.45.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 90.7473. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 12 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 63.65. 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 76 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 136.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 12 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 buy 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.400 at 109.430. Volume was 23% below average (neutral) and Bollinger Bands were 41% narrower than normal.
Open High Low Close Volume___
109.020 109.460 109.000 109.430 70,478
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 108.75 108.34 108.93
Volatility: 4 6 7
Volume: 88,364 88,894 90,280
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 0.5% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on JPY= and have had this outlook for the last 0 periods.
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