Japanese Yen: USD/JPY (JPY=X) Looking for Signs of life

Japanese Yen: USD/JPY (JPY=X) Looking for Signs of life

Japanese Yen: USD/JPY (JPY=X) Looking for Signs of life

The US dollar broke down significantly during the trading session on Friday as fear continues to be a major driver of markets. The Japanese yen is likely to continue to be a safety currency, and at this point it looks like the US dollar is being punished by a few comments late in the day by Jerome Powell suggesting that the Federal Reserve was willing to jump in and support the markets however they had to. The Japanese yen has been strengthening against almost everything anyway, so this is just a simple knock on effect from those markets.

Looking at this chart, you can see that we are testing the ¥107.50 level as we close out the week, and it’s very likely that we could break down from here. Having said that, the markets are overextended so don’t be surprised at all to see some type of short-term bounce, which I think will probably be sold into. The 200 day EMA should offer resistance and most certainly the 50 day EMA would. At this point in time, this is a market that is extraordinarily negative, so I don’t have any interest in buying unless of course the Bank of Japan do something drastic, something that is very well possible.

Looking at the longer-term charts, the ¥105 level underneath is the bottom of the larger consolidation area, just as the ¥115 level above is the top of that consolidation. The ¥110 level is essentially what it can be thought of as “fair value”, as it is the middle of that range and it will be a little bit of a magnet for price. All things being equal, this is a market that very likely will be looking for some type of direction on Monday, and it will almost certainly be very erratic at the open. Cutting your position size down to a smaller amount is probably the only thing you can do if you choose to trade. Looking at the chart, I don’t see an argument for buying this pair, and quite frankly any rally at this point in time will more than likely be a potential selling opportunity at the first signs of exhaustion. Monday is going to be out of control more than likely, so it’s probably best to wait for some signs of stability if you do in fact try to go long. Remember, the US dollar/Japanese yen pair is highly correlated to the S&P 500 as well.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 109.64.

The projected lower bound is: 106.83.

The projected closing price is: 108.24.

Candlesticks

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 22 white candles and 26 black candles for a net of 4 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 26.7112. This is not an overbought or oversold reading. The last signal was a buy 0 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 37.84. 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 sell 7 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 -130.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 sell 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.040 at 108.260. Volume was 95% below average (consolidating) and Bollinger Bands were 103% wider than normal.

Open     High      Low     Close     Volume___
108.300 108.360 108.190 108.260 4,552
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 110.06 109.52 108.39
Volatility: 14 8 7
Volume: 107,341 84,110 87,743

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 0.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 2 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.