XJY Japanese Yen Daily Chart Lower Band Violation Price Extended

Banzai!! BOJ Governor Kuroda has been working overtime printing yen like there is no tomorrow. The yen collapses as the money supply floods into markets sending the dollar/yen currency pair up through 107 and Japan and US stocks higher. The yen chart is a direct inverse of the SPX chart so make no mistake, a weaker yen fuels the stock market upside. The dollar/yen moves from 101 to 107 as the yen moves from 99 to 93.

The drastic drop in the yen basket is remarkable and definitely an infrequent event. Look at price sliding down the lower standard deviation band (pink) and only takes a dead-cat bounce three days ago (chart is not updated for today). The indicators are in the basement and still want another lower low. Price will want to seek the middle band now at 95.15 and falling. The pink dots show how price is far extended under the moving averages requiring a mean reversion. The stochastics are on the floor and helped price create the dead-cat bounce.

The yen will likely bounce around sideways from here and want to test the low again. The drop lower creates a gap at 95.4-96.2 and the yen now sits on an island. So when the yen recovers higher an island reversal pattern will be in play with a potential move back up through the gap but this may not develop for a couple weeks. It appears that much of the downside has played out but the yen should stabilize sideways for a few days or week or two before mounting a comeback. The weaker yen from early August exactly correlates and creates the stock market upside from the early August bottom. Banzai! When Kuroda stops or slows the BOJ money printing, the yen will recover and stocks will drop. The central bankers are the market. 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 10:30 AM on Thursday 9/18/14: The yen prints the lower low collapsing to 92.02. The collapse in the yen is remarkable with the dollar/yen teasing near 109 today.