Japanese Yen: USD/JPY (JPY=X) rally could pick up steam

Japanese Yen: USD/JPY (JPY=X) rally could pick up steam

Japanese Yen: USD/JPY (JPY=X) rally could pick up steam

The USD/JPY rally could pick up steam this week if it gets help from rising Treasury yields and increased appetite for risk. Powell was dovish in delivering his message that the Fed will be flexible with all of its monetary policy tools, including the important balance sheet.

The USD/JPY rally could pick up steam this week if it gets help from rising Treasury yields and increased appetite for risk. Powell was dovish in delivering his message that the Fed will be flexible with all of its monetary policy tools, including the important balance sheet. If the market believes him then yields have a lot of ground to recover. This should lead to a widening of the spread between U.S. Government bonds and Japanese Government bonds which should make the U.S. Dollar a more attractive investment.

With the fear of higher interest rates lifted, stock buyers should continue to drive the market higher. This should reduce demand for the Japanese Yen as a safe-haven asset, providing support for the USD/JPY.

There is nothing major coming out of Japan this week. The major U.S. reports this week are the ISM Non-Manufacturing PMI report on Monday and Friday’s U.S. Consumer Inflation Reports.

The Fed minutes will be released on Wednesday and Fed Chair Powell is scheduled to deliver another speech on Thursday.

On Wednesday and Thursday, investors should pay close attention to the slew of Fed speakers. We want to see which speakers agree with Powell, and which see things differently. This should create some volatility. If all agree with Powell then this could mean the Fed will refrain from making any rate hikes in 2019.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 111.48.

The projected upper bound is: 109.97.

The projected lower bound is: 107.04.

The projected closing price is: 108.50.

Candlesticks

A white body occurred (because prices closed higher 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 23 white candles and 27 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 60.1463. This is not an overbought or oversold reading. The last signal was a buy 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 31.75. 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 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 -90. This is not a topping or bottoming area. The last signal was a buy 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 sell 15 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.060 at 108.580. Volume was 99% below average (consolidating) and Bollinger Bands were 170% wider than normal.

Open High Low Close Volume___
108.530 108.580 108.490 108.580 1,107

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 109.58 112.36 111.11
Volatility: 12 8 7
Volume: 76,794 108,248 105,473

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 2.3% 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 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 21 periods.

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