Tuesday, June 11, 2013

XJY Japanese Yen Weekly Chart Fibonacci Retracements

The BOJ has hosted one big toga orgy party in markets this year. Their purposeful debasement of the yen (higher dollar/yen pair) has created the strong moves higher in the Nikkei, U.S. equities, European equities and European bonds. The weaker yen is the sole cause of the U.S. markets printing new all-time highs this year. The central bankers rule the markets. But, alas, all parties eventually come to an end. We pointed out the falling green wedge, oversold conditions and positive divergence one month ago forecasting the bounce, which occurred. The stronger yen sends the dollar/yen back under 100. The dollar/yen moves in the same direction as the broad equity indexes. Dollar/yen up (weaker XJY) = stocks up and dollar/yen down (stronger XJY) = stocks down. Overnight the dollar/yen has fallen from over 99 to 98 then under 97 now wrestling around in this area, thus, the U.S. equities futures are lower.

The indicators are long and strong so further sideways with sideways up bias is expected for the yen which corresponds to lower yen and lower U.S. equities. The 38% Fib is 109 so the yen still has quite a bit of strength to gain to tag this first Fib retracement. The 20-day MA at 103 is key since if price closes above that will hint that the move to the 38% Fib is very likely. Watch the dollar/yen since it dictates the direction in the SPX. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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