Tuesday, July 8, 2014
USDJPY Dollar/Yen and XJY Japanese Yen Daily Charts Ascending and Descending Triangles
The BOJ bludgeoned the yen last year creating a large portion of the US stock market gains. When the yen weakens, XJY price moves lower, the dollar/yen currency pair moves higher, and Japan and US stock markets higher. Banzai! The BOJ money printing devalues the yen just like the Fed devalues the dollar with its obscene money printing. The central bankers are the market. When the yen strengthens (due to less money-printing by the BOJ or if they say they will back off from stimulus), XJY moves higher, the dollar/yen moves lower, and Japan and US stock markets sell off.
The sordid path reaches a major inflection point now. The dollar/yen is in the yellow descending triangle pattern a bearish pattern that projects a drop to the 96.5-98.5 support area if the 101.0-101.5 base line fails. The dollar/yen is teasing near here today at 101.7-ish. There is a bit more room in the triangle for price to move but a major decision has to be made right now. The dollar/yen must bounce or die from here; either failure at 101, or recovery higher above 102. Between 101-102 the fight continues. The outcome will result in the direction described in the first paragraph.
The XJY displays an ascending triangle pattern which would be expected since the yen moves opposite the dollar/yen currency pair. The ascending triangle is a bullish pattern so the yen would target 103 resistance if the 99 triangle base line gives way to the upside. Anyone long Japan or US stocks will be whacked hard if the yen moves higher (dollar/yen lower). The stock market bulls are hoping for the sideways triangle vibe (thin purple lines) to play out which at least will provide a chance for more market upside.
The yen and 20, 50 and 200-day MA's are all on top of each other at 98.0-98.5. It is major decision time. The yen is about to pivot and the ramifications may be epic. The expectation is for the yen to break out to the upside and stocks to sell off, however, the yen can stagger sideways and remain in the triangle for another month avoiding the decision. When/if the dollar/yen collapses through the 100 round number that will surely be a sight to see. 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.
Note Added 9:25 AM: Dollar/yen 101.63.