Wednesday, March 5, 2014

XJY Japanese Yen Daily Chart Sideways Channel Sideways Triangle Potential Bull Flag

As the XJY, the yen, drops, the dollar/yen currency pair rises, and equities run higher on the weaker yen. The late-year rally in the stock market was clearly fueled by the yen dropping from the October peak down to the late December low. The green falling wedge, oversold conditions and positive divergence were used to forecast the bounce coming. If you recall at the time, almost universally, traders were shorting the yen calling for sub 95 and lots lower numbers. Booiiinnng. The yen bounced from the possie d and is now in a sideways channel pattern through 95-99.

The indicators are lining out sideways. Ditto the 20 and 50 MA's moving sideways. The yen may run through 96.5 and 98.5 moving forward. The moving averages can be used as a key range bracket so the equity bears, that want to see the broad indexes sell off, want to see the XJY break above the 20-day MA at 97.85 and the market bulls, that want the rally to continue in equities, want the BOJ to keep weakening the yen and the XJY to fall below the 50-day MA at 96.93 so SPX 1900+ can print.

The green bull flag pattern is in play. The first leg is from 95 to 99 so if the second leg starts at 97, the target is 101-102. The doji spinning top candlestick two days ago identified the near term top, and the yen plummeted yesterday sending the dollar/yen up through 102 and creating the stock market rally. Price appears content with moving sideways into the apex of the sideways triangle, for now, but a decision must be made within the next 4 or 5 days. If XJY decides up, the stock market moves down. If the XJY collapses lower, like yesterday and today, the stock market moves higher. The price behavior in relation to the trend lines of the sideways triangle, and also the range identified by the 20 and 50 MA's will provide the answer. 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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