Thursday, December 19, 2013

XJY Japanese Yen Daily Chart Oversold Positive Divergence

The yen tags the lower standard deviation band so a move back to the middle band and perhaps upper band is on tap. The green lines show oversold conditions and positive divergence so a bounce is very near. The RSI and ROC are hinting at some very near-term weakness so a little jog move may occur, up, down, up, over the next days. Price should seek the upper rail of the downward-sloping channel. The chart is favorable for a stronger yen moving forward, which is unfavorable for the stock market.

The BOJ slapped the yen hard earlier this year and that move, which caused the dollar/yen to move above 100 and higher, created much of the stock market gains. Now, from October, the BOJ yells Banzai!! once again and the yen is beaten down to current levels. This sends the dollar/yen above 104, at a 5-year high, and pumps the Nikkei, other Japan stocks, DXJ, and U.S. stocks higher. Look at the long red candlestick where the yen was destroyed to send the stock market higher. The BOJ should announce news this evening over more stimulus for the economy. Traders have been sniffing this out so the yen has continued its downward slide this week. Thus, the news may be a sell-the-news event. The positive divergence wants to bounce the yen and send it higher for a recovery rally. This will send the dollar/yen pair lower and the Nikkei and U.S. stocks lower. Watch to see if the dollar/yen loses 104, if so, you will see weakness in the futures. The stronger the bounce in the yen, the lower the dollar/yen will drop. 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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