Monday, January 6, 2014

XJY Japanese Yen Daily Chart Downward-Sloping Channel Oversold Falling Wedge Positive Divergence

The bounce in the yen occurs as projected a few days ago by the oversold conditions, falling wedge and positive divergence. Those long the Nikkei, DXJ and other Japan stocks are surprised at the strengthening yen, but they should not be since the chart said it was on tap. The Nikkei dumped again overnight and this chart is not yet updated for today so the yen should be attacking the upper rail of the channel which is also the same area as the 20-day MA at 96.33. A stronger yen sends the dollar/yen pair lower and causes selling in Japan and US stocks.

The indicators are not interested in seeing lower lows again. The weekly chart is positively diverged as well. Sure, the BOJ may try to unleash further shock and awe by destroying the yen but barring that, the chart wants to see the yen move sideways to sideways higher moving forward. This will disappoint anyone long Japan's stock market. Note the drop from the October high. The collapse in the yen from 103.50 to 95.0 caused the year-end stock market rally. Now that a bottom appears to be in, or forming over the coming days and weeks, and a strengthening yen is expected, the Japan and US stock markets should weaken. 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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