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USD/JPY showing where stock indices and Oil might be going?


Mercury

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Traders seem to flock to the Yen when stocks are under pressure and certainly the USDJPY cross has been closely mirroring the main indices for some time.  The daily chart for this cross tells me that price action has completed a wave 3 down and is in a relief rally to a wave 4 but this is contained in a triangle with 5 clear touches and a recent break below the bottom line.  The question is whether it will now bounce up for another cycle, of even break the triangle to complete a clear A-B-C or carry on down to complete the wave 5?  Whenever it does break down I have 2 targets for the end of the move: the first a weekly chart tramline at about 11000 and the second is the weekly fib 38% off the June 2015 high (10670ish).  When it does reach the end of this wave we can expect a significant retrace rally.  Does this mean a drop and then strong rally in stocks and Oil?  probably to a higher high than where we are presently before a big drop in all of them?  I think so but the challenge is to time the entries as always.

 

here are the charts:



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Update on USDJPY:

 

Well as I suspected we got a bounce off the lower triangle so now it looks like another hit on the upper is on the cards.  The market could drop before then so a confirmed break of the lower triangle line would be a Short signal.  Maybe FOMC will be the clarifying trigger for this market.  I was stopped out for no loss on one position and took a 50 pip profit on the other, which I will reinvest into another short at either a touch on the upper triangle line or a break of the lower one.

 

If anyone else is trading this market I'd love to hear your views!

 

Here is the chart:



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