Japanese Yen: USD/JPY (JPY=X) Rebounding after Trump Tweet Calms Investors

Japanese Yen: USD/JPY (JPY=X) Rebounding after Trump Tweet Calms Investors

Japanese Yen: USD/JPY (JPY=X) Rebounding after Trump Tweet Calms Investors

The Dollar/Yen is trading slightly better shortly ahead of the U.S. opening. The Forex pair has erased all of its earlier losses, producing tremendous whip-saw action. The catalysts behind the volatile, two-sided price action are escalating tensions between the United States and Iran, and indications of calm.

Earlier in the session, the Dollar/Yen plunged on safe-haven selling after Iran launched missiles against an Iraqi air base that housed U.S. troops. The initial reaction suggests investors were preparing for the worst – a counter-attack by the U.S. and perhaps the start of a war. However, cooler heads prevailed, the selling stopped and the Forex pair eventually recovered from the steep loss to turn higher for the session.

The selling stopped after a pair of tweets from Iran and the United States.

Iranian Foreign Minister Mohamad Javad Zarif said via Twitter that “we do not seek escalation or war, but will defend ourselves against any aggression.”

U.S. President Donald Trump tweeted, “All is well!” He also added that an assessment of casualties was taking place.

Daily Forecast

The financial markets are reversing their earlier moves in a big way, suggesting the worst may be over and perhaps we can move on. U.S. equities have erased their losses, crude oil has given up most of its earlier gains, and the safe-haven Treasuries, gold and Japanese Yen have also retreated from their intraday highs.

CNBC writes that “The reassuring tone of Trump’s tweet marked an unexpected shift away from the harsh rhetoric the president has used in recent days to characterize tensions with Iran, which escalated following a U.S. strike that killed Iranian General Qasem Soleimani.

Trump is scheduled to address the nation at about 14:00 GMT. This speech could set the tone in the markets for the rest of the session.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 110.02.

The projected lower bound is: 108.21.

The projected closing price is: 109.12.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 71.6884. This is not an overbought or oversold reading. The last signal was a buy 3 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 53.42. 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 106 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 -39. This is not a topping or bottoming area. The last signal was a buy 1 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 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.690 at 109.110. Volume was 52% above average (neutral) and Bollinger Bands were 4% narrower than normal.

Open     High      Low     Close     Volume___
108.400 109.240 107.630 109.110 129,203
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 108.78 108.93 108.61
Volatility: 6 5 7
Volume: 71,839 79,229 87,141

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 0.5% above 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 5 periods.

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