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Heading towards important resistance level 11500 after Nikkei triangle break on Trump speech and increasing speculation of a US rate hike on 15th March FOMC.

 

020317JPY (DFB).png020317Japan 225 (DFB).png

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Can you tell me what the correlation is between the Nikkei and USDJPY ? thanks

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Hi . It's the inverse correlation between a country's currency and the perceived value of their companies, a cheaper currency will boost exports which is good for companies. When the British pound goes down the FTSE goes up. When the Nikkei goes up the Yen goes down, so USDJPY will go up. A weak Yen verses a bullish dollar should equate a strong move up for USDJPY but Yellen's speech yesterday seems to have upset the dollar bulls as she left herself wriggle room for not raising interest rates on the 15th March if next weeks NFP is not up to scratch.

I have over simplified for the sake of clarity and deliberately left out such considerations as safe havens, bond yeilds, commodity reserves and worlds reserve currency (USD). Useful cutout and keep pic here.

 

Correlations.PNG

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Very tight correlation in Gold and Yen charts JPYUSD (note inversion). Both coiling, daily charts.

 

gold1.PNG

 

 

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UJ has entered an area of historic congestion and may struggle to make it's way through and down or up and out. May well move sideways until some future major risk event.

 

4 hour chart.

 

USDJPY(£)H4.png2107.png

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Interesting analysis highlighting this pair's relationship to US Treasuries. Note the chart in the article is weekly not daily as titled. Not to sure about his final verdict but certainly this is nearing an important level.

 

https://www.fxstreet.com/analysis/usd-jpy-forecast-in-a-no-mans-land-needs-10-yr-t-yield-above-24-percent-201710200727

 

USDJPY(£)Weekly.png2010.png

 

 

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Any thoughts on this weekends planned political events  and the effect on USDJPY?

 

"The Japanese PM dissolved the lower parliament on 28th September, initiating the process for the snap elections to be held on October 22nd. We believe that it is a move to secure a fresh mandate in the parliament after Mr. Abe’s association with a series of scandals over the summer. The approval rating for Abe’s government sunk to 29.9%, sliding below 30% for the first time, and his disapproval rating rose to 48.6% [according to a poll conducted by the Jiji news agency]. Japan has been stuck in an on-and-off cycle of deflation for two decades now and the election is an opportunity for the people to re-affirm their belief in the sustenance massive economic stimulus that drives the nation." Source.

 

I also think this is an interesting chart. USDJPY Vs Japan 225. A growing disparity and potentially an interesting trade opportunity? 

 

2017-10-20 10_41_06-IG Dealing Platform _ Spread Betting.png

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HI   thanks for that, great article and very well researched. Very interesting conclusion and trade idea. I had noted the declining popularity of Abe's government so was a bit surprised Dailyfx reporting Abe expected to win by a landslide this morning but your source article agrees with that likelyhood.

 

So, after all that math :), in conclusion they expect Nikkei to rise pre-election (which it has) then dip post-election. Useful to bear in mind though the disparity you mention could well dampen any knock-on effect on usdjpy.

 

The usdjpy nikkei disparity is presumably, at least in part, a function of Trump's inability to push reforms through congress. The bill that was past yesterday is reported to decrease the Democrat party's ability to hinder progress on planed tax reform which has weighed on the dollar (and so advantaged the yen). Progress from here should reverse that and so bring yen and nikkei back into closer (inverse) alignment meaning a rise in usdjpy for the longer-term.

 

Always interesting analysing the inter-connectedness of the markets.

 

 

 

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Still stuck in a large range since April. Needs to make a meaningful break. Recent COT report indicates large speculators expect that to be a break up. 118.00 would then be the obvious target.

 

 

USDJPY(£)Daily.png1511.png

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NZD popular for carry Trade due to interest Rate, when there is appetite for risk NZD appreciates with good Correlation to Global Equity Markets. However Gold often Depreciates when there is appetite for Risk, perhaps keep this cross current in mind when using the gold to NZD Correlation.

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Downward at mid long-term range, trying to find support around 111.64 but the US dollar basket looks to be continuing down.

 

USDJPY(£)Daily2411.pngUS Dollar Basket_20171124_10.26.png

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Price looking to continue down to bottom of range on daily and is contained by the 200 MA on hourly. Also contained by the 100 MA on the 5 min, looking to trade candle reversal patterns on bounces down off the 100 MA on the 5 min.

 

 

USDJPY(£)Daily2401.pngUSDJPY(£)H12401.pngUSDJPY(£)M52401.png

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Yes that correlation is well understood, when the dollar goes down the dollar goes down, but what's the point of reposting ancient charts? You forgot to add any kind of narrative to explain any kind of rationale. 

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You have made about 10 posts of biases  and beliefs about usdjpy, it is all subjective narratives .The simple concise narrative is the  USDJPY  is moving like all the dollar constituents, as the evidence on this chart shows on eurusd, gbp/usd and usdjpy.

 

dollar index.jpg

 

 

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The bias is objectively based on the daily, hourly and 5 min usdjpy charts as I made clear. And of course BoJ intervention can disrupt the usdjpy/dollar basket correlation at any time.

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If any of these biases are relevant, they should be covered by the chart and trading system.Adding biases and beliefs will destroy traders.

 

Most people are not successful when it comes to trading. Why?

I can answer that question on a number of levels. At the most basic level, people must trade by processing information. Unfortunately, we're not very efficient information processors. We have a lot of biases which enter into trading decisions.

 

http://vantharp.com/consulting/vkt_interview.htm

 

Keep your trading system simple stupid K I S S

 

If boj, fed , nzd  or any other beliefs of potential gambler's fallacies , is included in trading, most traders will mess up and lose.

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The bias is relevant precisely because it is very clear on the charts in 3 distinct time frames. Pointing this out to any who have not seen it will aid their trading by discouraging them from trading against the trend as your 'systems' regularly do as I have pointed out many times over many months.

 

That is 'keeping it simple', as compared to your K.I.S.S. 'system' as displayed in the chart below.

 

op4.PNG

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Where is Boe or Boj  or Nzd on my charts?

 

I don't need to add noise about pigs flying on my charts , the charts i.e road map  does the analysis, the road map is clear .There are no pigs flying on it.

 

casey boj.jpg

 

 

 

 

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I was pointing out, there is too much noise, it is not necessary for decision making.It is like a person driving a car , and a back seat driver talking, similar to a trader trying to trade with all unnecessary information. 

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You are telling me there is too much noise on my chart compared to yours? No. Are you talking about the fundamental considerations of occasional interventions from central banks as being 'noise'? No.

 

op5.PNGop4.PNG

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I am just saying all these other analysis and beliefs are not necessary.A trader can see everything necessary on the chart, sometimes there are unannounced decisions statements from central banks, so these should be in the trading system.

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But now you are talking about you're own hindsight reading of charts. The chart was, but what will the chart be? Oh, I just got blindsided by an unexpected rate decision, my 'system' didn't see that coming. Of course they can't be in your 'trading system', they are unexpected.

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usdjpy still deciding on range bottom, 108.27 (orange) or 107.31 (red).  Interestingly retail started to go majority long way back around the 7th Jan (near top) and now longs are 74% of clients with a position. I guess any stop hunters will know where to aim.

 

Daily chart.

 

 

USDJPY(£)Daily.pngsent3.PNGsent2.PNG

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