FXY Japanese Yen Weekly and Daily Charts Falling Wedges Oversold Positive Divergence

The yen weakness created by the BOJ policies, in concert with the Fed's current QE4 Infinity and Beyond, are fueling the equity markets. The drop in the yen is astonishing for such a short time.  The red rectangle shows the drastic yen drop as the BOJ says day after day that they will run the printing presses non-stop forever. This specific drop in the yen provided the upside thrust for the equity markets and enabled the SPX to push to new all-time highs. The traders looking for a weaker and weaker yen (higher and higher dollar/yen to 100, 110, 120, 150, some say 200, if you can grasp that with your mind) may be disappointed in the coming time frame since the positive divergence across the charts indicates that the major part of the move has occurred. The momentum is so intense to the downside, however, the FXY will likely need to bounce around in a basing pattern to burn off all this downside energy.

The FXY 98 level may serve as a head for a potential inverted H&S moving forward. The yen would need to bounce as the positive divergence projects, but a right shoulder would need formed. The FXY is well under the 20-day MA well under the 50-day MA under the 200-day MA so a reversion would be in play. A bounce to 102 is a reasonable expectation. This strengthening of the yen would correspond to the dollar/yen dropping through 98 and lower and equity markets selling off. An important take away from these charts is that if the yen does stabilize and base, and recover, or at least move sideways, this will take away much of the upside fuel that the equity markets just used to print the new all time highs. 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.