Japanese Yen: USD/JPY (JPY=X) rebounds sharply and extends daily gains
The USD/JPY pair dropped immediately after the release of a lower-than-expected US CPI reading. It fell to 111.35 and then rebounded sharply, breaking on top of 111.60. The greenback also climbed above intraday August highs and reached 111.90, the highest since August 1.
As of writing was trading at 111.80, up more than 50 pips from yesterday’s close and headed to the highest close in almost two months. The rally of the pair took place despite the slide of the US dollar. The DXY fell to 94.60, a new weekly low. The greenback lost strength in the market after US inflation data and amid risk appetite.
The CPI rose below expectations in August. Yesterday the PPI showed a decline in the index and also weakened the greenback. “In many ways, the current inflation environment is just what the Fed wants to see. Core inflation has slowly moved back up to levels consistent with the FOMC’s target. Yet there are few signs of inflation blowing far past the Fed’s comfort zone and forcing the Fed to raise rates faster than expected; inflation expectations—especially longer-term views—have been little changed”, wrote Wells Fargo’s analysts.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 110.80.
The projected upper bound is: 113.23.
The projected lower bound is: 110.79.
The projected closing price is: 112.01.
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 7 white candles and 2 black candles for a net of 5 white candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black candles.
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 87.7935. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 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 59.00. 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 40 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 151.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 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 buy 14 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed up 0.730 at 111.980. Volume was 23% below average (neutral) and Bollinger Bands were 21% narrower than normal.
Open High Low Close Volume___
111.250 111.980 111.140 111.980 79,254
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 111.28 111.30 109.77
Volatility: 7 7 8
Volume: 93,095 103,010 105,319
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 2.0% above its 200-period moving average and is in an upward 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 bullish on JPY= and have had this outlook for the last 4 periods.