Japanese Yen: USD/JPY (JPY=X) Japanese economic schedules are light as far as major economic releases are concerned
Uncertainty over U.S.-China trade relations drove the price action last week in the Japanese Yen. It wasn’t the actual possibility that a potential trade deal would fall apart and the trade dispute between the economic powerhouses would escalate, but rather how these events would impact the U.S. economy.
Stock market volatility and weakness played a role in the movement in the Japanese Yen as many equity investors sought shelter in the so-called safe-haven asset. However, a lot of investors also bet heavily that a prolonged trade dispute would weaken the U.S. economy enough to cause a recession later in the year.
A U.S. recession would force the Federal Reserve to lower interest rates. So some of the price action we saw last week was attributed to investors making moves in anticipation of a shift in Fed policy later in the year.
The biggest driver of the longer-term direction of the Dollar/Yen has been the divergence between the monetary policies of the comparatively hawkish U.S. Federal Reserve and the ultra-dovish Japanese Yen. With both central banks holding their benchmark rates steady, the interest rate differential has remained basically the same for a while.
This week, the U.S. and Japanese economic schedules are light as far as major economic releases are concerned. The U.S. is scheduled to release data on retail sales on Wednesday. This report is an important component of Fed policy because it involves the consumer and the consumer ultimately drives the economy. However, this report is likely to continue to take a backseat to U.S.-China trade relations.
Further weakness and volatility in the global equity markets will likely put pressure on global interest rates and this will help increase the Japanese Yen’s appeal as a safe-haven asset. If conditions calm and stocks start to recover then look for the USD/JPY to start to recover some of last week’s losses.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 110.56.
The projected lower bound is: 108.70.
The projected closing price is: 109.63.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
Separating lines occurred. If the lines occur during an uptrend and the first line is black and the second is white (which is not the case with FOREX JPY=) then this suggests that the uptrend should continue.
If the separating lines occur during a downtrend (which appears to be the case with FOREX JPY=) and the first line is white and the second is black (which is the case with FOREX JPY=) then this suggests that the downtrend should continue.
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 19.1257. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 16 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 28.57. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. 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 -112.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 12 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.270 at 109.670. Volume was 46% below average (neutral) and Bollinger Bands were 32% wider than normal.
Open High Low Close Volume___
109.750 109.840 109.580 109.670 49,891
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 110.58 111.22 111.46
Volatility: 4 5 7
Volume: 77,837 87,794 101,112
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 1.6% 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 moderate flows of volume out of JPY= (mildly bearish). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 5 periods. Our momentum oscillator is currently indicating that JPY= is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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