USDJPY US Dollar/Japanese Yen and SPX S&P 500 Daily Charts

There's a lot of spaghetti on the USDJPY currency chart to sort through. In a nutshell, traders seek perceived safety in the yen during shaky financial times. A stronger yen against the US dollar sends the USDJPY currency pair number lower. Think back to your fractions in high school. The numerator is on the top and denominator on the bottom so as the yen, in the denominator increases, it sends the pair number lower.

When traders are in a risk-on mood, partyin' like its 1999, as Prince would sing, they sell the yen and buy stocks. Weakness in the yen sends the USDJPY currency pair number higher along with equities (the denominator is dropping sending the ratio number higher).

Investors and traders are massively into the yen (Wall Street consensus is yen strength) worried about the future of markets. The yen strength positions are at record levels. Only recently, the last couple weeks, do you see the USDJPY currency number rising (weaker yen) corresponding to risk-on and US stocks rallying higher. The thick green lines show a weaker yen against the dollar, sending the USDJPY currency pair number higher which occurs in concert with US stocks moving higher. Conversely, the thick red lines show a stronger yen that represents risk-off sending the currency pair number lower which corresponds to US equities selling off. The central bankers are sick pups; this Keynesianism-gone-mad approach to financial markets over the last decade-plus, in Japan's case (BOJ) for over two decades, will not end pleasantly.

The blue lines show an inverted H&S pattern with neckline at 106.6-ish. With the head at 105.0, that is a difference of 1.6 so the target, if price breaks above the neckline (which it did) is 108.2. If you use the intraday low at 104.5 that targets 108.7. These targets are in the area of that resistance cluster from June and July. 

The dollar/yen pair tagged the upper standard deviation band so the middle band at 106.29 is on the table. Price broke up through the neckline of the inverted head and shoulders so a back kiss would be expected at 106.6-ish. The stochastics are overbot and the ROC is negatively diverged so these parameters may provide the juice to send the pair lower to 106.3-106.6 for a day or few. However, the RSI, histo, MACD line and stochastics are all long and strong wanting to see more higher highs in the USDJPY in the days ahead.

The rising brown wedge, a bearish pattern, is in play and may help to send price back down for that 106.3-106.6 retest. Price is also bumping its head against the 50-day MA at 107.20. A spank down from this moving average may also facilitate the back kiss process.

The ADX pink box shows that the move lower in the dollar/yen (stronger yen) was a strong trend in May-June-July, however, this strong trend lower has petered out (when global traders are in record yen strength positions). The ADX is hinting at trendless choppy sideways stuff ahead. The green Aroon line is at zero with nowhere to go but up which would correspond to a pullback in the dollar/yen pair and the risk-off sentiment. The blue boxes show the prior June fractal that may rhyme with the current action. This hints at some sideways movement for the days ahead and then a move lower again, perhaps for those retests, which would correspond to some stock market softness.

What does all that mumbo-jumbo mean? USDJPY likely will back test the 106.3-106.6 area and then resume the upward move over the coming days perhaps a week or so. The jury is out on the inverted H&S. It is likely that the pair chops around in the 106.3-107.5 area in this short term due to the pending central banker announcements (which can change the game in a heartbeat).

King Draghi (ECB) will pilgrimage to the mountain on Thursday morning, 9/12/19, and then bring the tablets down from on high and tell global traders how to trade (the euro move will impact other currency pairs and the stock market). Then, its a double-header, with Emperor Powell on tap next Wednesday with the Fed rate decision, 9/18/19, as the teen palindrome numbers continue (91819), ready to flap his dovish wings, or will he? The central bankers are the market and will greatly impact the above charts over the next 7 trading days. The USDJPY currency pair number is currently trading at 107.30 trying to sneak above the 50-day resistance. 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 8:13 PM EST: The dollar/yen pair moves higher to 107.57 breaking above the 50-day MA at 107.19. The RSI, histo, MACD and stochastics are all long and strong on the USDJPY daily chart so the daily time frame wants to see further yen weakness against the dollar (rising dollar/yen pair) after any pullback should occur.