Japanese Yen: USD/JPY (JPY=X) – US Dollar Falls Hard Against Japanese Yen
The US dollar has broken down significantly during the week, reaching down towards the ¥105 level. That is the bottom of a larger consolidation area, so the question is whether or not we can continue to break down? I do think that it is likely that we will see that happen, because we have tested this area so many times. That being said though, the market needs to bounce a bit because it can’t go in one direction forever. Two weeks go by and we have lost 600 pips in a pair that had done almost nothing for ages. With this, waiting for an opportunity to start selling at higher levels makes quite a bit of sense. For myself, I will be looking to sell closer to the ¥107 level if we do in fact get that move.
Alternately, if we break down from this level, I think the best thing that a longer-term trader can do is look for the opportunity to play the bounce. You simply can’t chase the trade all the way down here as the Bank of Japan has a long history of intervening below the ¥105 level. The closer this pair gets that the ¥100 level, the more likely it is that the Bank of Japan either intervenes directly or does some type of side monetary action to weaken the Japanese yen. In a heavy export economy like Japan that is dealing with a global slowdown, the Japanese yen gaining the strength it has is not something that they can deal with for very long.
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 108.63.
The projected upper bound is: 105.95.
The projected lower bound is: 102.65.
The projected closing price is: 104.30.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 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 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.
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 6.5812. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 23.89. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 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 -145.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 10 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 7 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.910 at 104.390. Volume was 98% below average (consolidating) and Bollinger Bands were 280% wider than normal.
Open High Low Close Volume___
104.890 104.910 104.140 104.390 1,312
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 107.70 109.22 108.32
Volatility: 12 10 8
Volume: 120,290 90,151 88,278
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 3.6% 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 6 periods. Our momentum oscillator is currently indicating that JPY= is currently in an oversold condition.