Friday, August 8, 2014

Dollar/Yen Intraday Chart Dramatic Turnaround in US Futures

About five or six hours ago the S&P futures were down -15 points on the threat of US airstrikes in northern Iraq. S&P futures now improve to +5 after Russia requests mediation talks with Ukraine to seek a peaceful resolution that geopolitical mess. But the yen tells the story. The NIKK dumps -3% overnight since the dollar/yen dropped to 101.50 which means the yen strengthens, which represents less BOJ money printing, so stocks drop like a rock. As equities started to fall down the rabbit hole, Governor Kuroda rolls up his sleeves and runs the BOJ printing presses all out flooding markets with yen which weakens the yen, sending the dollar/yen currency pair higher, and stocks higher since the easy money buys stocks. Nothing to it.

The chart has an inverted H&S pattern in play so a trip back to the 102.10 is on the table. The chart is very symmetrical and may simply play around the mid-point at 101.80. The sideways channel at 101.5-102.1 shows that the market bulls will win with a dollar/yen above 102.10 and market bears will win under 101.50. The middle is noise. Also under consideration is recent strength in the dollar which will impact the dollar/yen and skew the analysis moving forward. 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 8:39 AM: The dollar/yen is above 102 to 102.02 providing stock market fuel. S&P futures +8. Banzai!! The market bears can probably recover and slap the bulls lower as long as the dollar/yen does not break above 102.10. Above 102.10 and the bulls will likely begin a near-term stock market relief rally.

Note Added 8:43 AM: Dollar/yen 102.01.. 101.98.. whoa... 101.95....You can calibrate the stock market to Kuroda's money printing. The central bankers are the market. S&P's +6.

Note Added 9:34 AM: Dollar/yen 101.92 so the SPX begins the day up +5.

Note Added 4:10 PM: The dollar/yen is 102.07 as the US markets close for the week. The higher dollar/yen pair (weaker yen) provides bull juice today with traders using the cheap yen to buy stocks. BOJ's Kuroda is Santa Claus bringing Christmas in August. Note, however, the dollar/yen has not moved above the top channel line at 102.10. That will be drama for Monday.

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