Japanese Yen: USD/JPY (JPY=X) Main Trend Changes to Down after Powell Hints at Rate Cut
Any doubts about the Japanese Yen’s status as a safe-haven asset were put to bed on Friday after the currency rallied to a 20-week high against the U.S. Dollar on Friday. The Yen posted its largest daily gain since May 2017 as investors moved into the safe-haven currency in response to further weakness in U.S. equity markets and dovish comments from Federal Reserve Chairman Jerome Powell.
Powell suggested the central bank could cut interest rates in the wake of the coronavirus. The central bank chief said the Fed will “act as appropriate” to support the economy in the face of risks posed by the coronavirus outbreak, though he said the economy remained in solid condition.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on Friday when sellers took out the last swing bottom at 108.313. It was reaffirmed later in the session when sellers took out the next main bottom at 107.651.
The main trend will change to up on a trade through 112.226. This is highly unlikely, but Monday will be seven days from the last main top, which puts the USD/JPY in the window of time for a closing price reversal bottom. This chart pattern won’t change the trend to up, but it could trigger a short-term correction.
The main range is 104.463 to 112.226. On Friday, the USD/JPY closed inside its retracement zone at 108.345 to 107.428.
The longer-term range is 112.405 to 104.463. Its retracement zone at 108.434 to 109.371 is now resistance.
Combining the two retracement zones forms a potential resistance cluster at 108.345 to 108.434.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 108.76.
The projected lower bound is: 105.90.
The projected closing price is: 107.33.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 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 doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. The two candles preceding the falling window were black, which makes this pattern even more bearish.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 9.1997. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 32.36. 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 6 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 -228.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 5 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.700 at 107.370. Volume was 96% below average (consolidating) and Bollinger Bands were 110% wider than normal.
Open High Low Close Volume___
107.380 107.450 106.970 107.370 3,050
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 110.12 109.53 108.39
Volatility: 15 8 7
Volume: 102,261 82,784 87,526
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= gapped down today (bearish) 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 0.9% 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 1 periods.
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