Wednesday, September 10, 2014

XJY Japanese Yen Weekly Chart Downward-Sloping Channel Sideways Triangle Positive Divergence

The recent drop in the yen basket sends the stock market to new all-time highs. Price is printing completely under the lower standard deviation band for the last month; a phenomenal and very rare event. Yen is slammed and beaten severely to a six-year low; bludgeoned form the BOJ money printing. ECB President Draghi fired the QE money bazooka causing the euro to plummet sending the dollar higher. The higher dollar is in concert with a weaker yen that sends the dollar/yen currency pair to six-year highs at 106.79. The stronger dollar will continue to pressure commodities, oil and gold moving forward.

Note the tight band squeeze that occurred and the yen shorts win. The red sideways triangle is in play, however, there are no real touches to the top rail so the pattern does not have a lot of credibility for its 91.50-ish downside target. The lower rail of the downward-sloping channel is at 89-92. The green lines show positive divergence across all indicators after the new lows are printed, however, there is lots of momo to the downside so some sideways is likely and another basing period. It is surprising to see the big drop since a very nice base was formed for the yen over the last few months.

The ADX shows the last strong trend was down in 2013; the current trend lower is not yet considered a strong trend lower it is simply a price move lower in a sideways stumble. The drastic drop in the yen clearly shows the fuel behind the obscene +30% gain in the US stock market in 2013 as well as gains in Japanese stock and European stocks and bonds. The BOJ saved the day last year but only dug a deeper hole for themselves.

The lower boundary band violations must be rectified so the yen should moderate going forward and at this time the lower projections mentioned above are not expected instead the yen would be expected to move sideways to catch its breath and re-base 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 7:16 PM:  The yen drops to 93.60 a complete collapse. The yen is down from 98.30 to 93.60, 4.70 points, a drop of -4.8% in only 26 days. The yen is dropping at a pace of about -0.20% every day for the last month.

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