USDJPY in long term Bear

[Mercury]

The USDJPY pair seems to follow the main stock indices because, if received wisdom is to be believed and why not in this case, investors fly to the Yen as one of their safe havens (also gold and US Bonds).  If you mapped this pair with the S&P500 over the recent past you can see similarities in movement.  Not a reason to trade it but a decent backdrop narrative for technical analysis.

 

This pair has fallen sharply of late and I think it still has a little bit to go (200-300 points) before a relief rally and another drop.  It is not exactly in sync with the S&P500 in terms of EW counts, just moves in similar waves.

 

Right now the price has just bounced back from the Fib 62% resistance after a short rally and is set to fall with the S&P500 in my view but only a few hundred points before a stronger rally is likely.  Long term I think it will drop heavily if the main indices also go very bearish.

 

I'm short for a quick trade at the 62% fib.

 

Here are the charts:



 

[Welshman]

Hi Mate,

 

Interesting view, I'm leaning the other way for a long-term bull market after completion of the current correction see daily chart attached.

 

I'm struggling to make sense of the labelling atm as you'll see. The Wave 5 of c has either completed at 11086 or if not it's a 3 which brings it's own problems as that makes the latest wave up a 4. If it's a 4 it overlaps 1 therefore making that structure an ED and an expanding one at that. As you've pointed out previously EX ED's are rare therefore I'm favouring C complete at 11086 and the current wave up has to be 1. (but as yet labelling is unclear and I'm still working on it). Does any of that make sense?

 

What do you think? 

[Mercury]

It does make sense.  Thanks for pointing out the D-E, I didn't think of it but had chickened out of my Short at 62% anyway due to relief rally likelihood on the main indices and Oil/Copper.  If we do get such a relief rally soon (I'm thinking a small W3-4 on that) then USDJPY will likely rally a bit too, which brings your A-E formation into play nicely.  My current take is 1-5 down in line with my Bearish stance on indices and commodities but I have not discounted the A-B-C scenario as you can see from my charts.  Either way I think we will get another leg down to complete the C/3 and then we will see from the shape of the following rally which way this is going.

 

My motto is, If in doubt, stay out! (wish I adhered to it more thought...)  I might take a cheeky short next week depending on what I see else where and the rising Triangle line (pink) might be a good place to chance it if we get a kiss, let's see.  However I will continue to swing this market so am really waiting for the W3/C to bottom out before taking the W4 Long and then we will see what to do from there.

[donaldprice]

Hy Mercury

I too share the possible belief that USD JPY, could begin to break down to the down side. Although the momentum is still to the upside, it does appear weak. The FTSE100 indice does appear to be related, however no doubt its mostly due to market instability and therefore investors prefer to place their money in safe haven currencies like yen. The Bank of Japan howeve do seem to be keeping a good eye on the 110.67. level. I placed a long position funny enough the day the bank of england announced they would keep interests rates at the same rate,   last thursday the 17th which caused that big rally, for it only to drift downwards 30 minutes later and attempted to retest 110.67, but rallied again, therefore the market seem to have given up, there was also a reuters post stating that the BOJ was watching the yen very closely at the 110 level. But as you can see from your well presented charts, it is channeling up and i too would be looking for the opportunity to short, as it could break away. I believe that when the buyers become exausted, the bears will seek the opportunity. It does seem like a delicate currency pair at the moment. Be interesting if it passes 11331 level and then await to see 113.80 level, if that fails then downside most likely.

[Mercury]

Hi Donald,

 

Thanks for your perspective.  I wonder whether you could share your analytical method (in principle) to support your views.  I must admit I am a bit on the fence with USDJPY as it could have completed a Daily chart 1-5 EW down on Mar 17 and there is a fairly strong Positive Momentum Divergence at this point on the Daily chart.  On the other hand we may still be in a Wave 3-4 Triangle formation with another leg down to go.  The patient thing to do would be to wait for either this final leg down to go Long OR a significant retrace to go Short.

 

Price hit my Pink lower Triangle line with a kiss and I got stopped in to a Short at this point but am not fully convinced of its merits yet so will be moving stops to BE quickly on this one.  There is a Neg Mom Div on the hourly to support the short but not a strong one.  Could easily see this moving back up to the upper Triangle line and at that point I would need to reassess.

 

Here is te chart: