Japanese Yen: USD/JPY (JPY=X) investor indecision and impending volatility

Japanese Yen: USD/JPY (JPY=X) investor indecision and impending volatility

Japanese Yen: USD/JPY (JPY=X) investor indecision and impending volatility

The Dollar/Yen is edging higher on Wednesday, but inside yesterday’s range. This tends to indicate investor indecision and impending volatility. The Forex pair has traded inside Friday’s range all week, solidifying our conclusion that investors aren’t sure how to play the coronavirus story.

Improving risk appetite may be underpinning the Forex pair, however, lingering uncertainty over the economic impact of the coronavirus could be capping gains. The price action this week suggests the Dollar/Yen is disconnected from the increasing demand for risky assets.

Daily Forecast

I think the USD/JPY’s recent performance is telling investors to “wait and see” how the coronavirus affects the global economy. Traders are ignoring the global equity markets’ performance because they know that the move in Asia is being fueled by stimulus from China, and the rally to new highs in the United States is being helped by investors chasing higher yields in the United States.

In the meantime, the reports calling for a big hit to China’s economy and a possible dent in the global economy keep coming out, making investors a little concerned about the possibly of a global recession.

It’s going to take a surge in U.S. Treasury yields to signal all clear about the impact of the coronavirus. When that happens, the USD/JPY should spike to the upside. Until then, we could be looking at a mostly sideways trade.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 110.98.

The projected lower bound is: 109.21.

The projected closing price is: 110.10.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black candles.

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.

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 81.5388. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 2 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 59.78. 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 132 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 99. This is not a topping or bottoming area. The last signal was a sell 0 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 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.010 at 110.070. Volume was 96% below average (consolidating) and Bollinger Bands were 12% wider than normal.

Open     High      Low     Close     Volume___
110.090 110.090 110.050 110.070 3,621
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 109.57 109.31 108.37
Volatility: 6 5 7
Volume: 79,414 75,235 86,642

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 1.6% 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 4 periods.

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