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Yen as a safe haven


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Aligned to the Stocks move on US open, or just before in fact, the Yen has failed the breakout retest and now put in a lower low.  It is not over yet for sure as the US open will doubtless put in a bit of bull/bear clashing before resolution but the odds seem to favour the bears at present.

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What a difference a couple of weeks make!! A false break out to the downside mainly driven by the deescalation of US - Iran tensions created a short squeeze in the Yen. Target would be gap fill a

Didn't see you post until just now @dmedin, don't see the Yen as any more manipulated than any other government backed currency and don't get me started on crypto manipulations (think Ponzi!).  As I m

There are a number of so-called safe haven assets or markets that are frequently mentioned in trading and investing circles such as utilities, gold, USD and so on.  The Yen falls into this category mo

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  • 2 weeks later...
13 hours ago, Level_Trader said:

Thoughts on USD/JPY.. do we see 110? 

The price gap might suggest $1.11 but first price has to break above the recent highs.  A contrarian view would be that if USD turns bearish again and Stocks also put in a pre Christmas bearish phase (a repeat of last year?  surely not possible...) then the Yen strengthens from here.  And as I write Stocks are moving south...

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Yes the upside does look capped around the 111 area but the link to equities heading lower may well be the overriding factor. The major indices look overstretched and its likely we'll see a retrace sooner or later...potentially towards the end of this week?! 

This period at the moment certainly feels like the calm before the storm...

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Yen seems to be gaining some momentum vs USD as DX is potentially tipping over back into bearishness.  Can't help wondering what this may indicate for stocks.  Nikkei and Dax have been persistently bearish of late despite US strength and FTSE100 is stuck at the key resistance level of the Fib 76/67%. 

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1 hour ago, dmedin said:

Still in a rising wedge

True enough, although I would draw my lines a bit differently.  Your lower line, the important one if you are expecting a bearish breakout, has only 2 touches, which means by convention it is not yet valid.  I have a different line which has 3 touches and a prior touch through a gap with an over shoot as a result of the gap.  In fact my line a a bit more conservative in terms of calling a breakout.  Price has been stalled at the Fib 50% twice with a potential double top in play.  In the bearish scenario I might expect a short term pull back rally as stocks rise and then a faster drop through short term support that should set up a test of the channel line to the down side.

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  • 2 weeks later...

I retain my Yen rally vs USD long term scenario as posted at the beginning of this thread.  My feeling is that this pair will join the others in a USD driven move that could see a completion of a long term Head & Shoulder pattern on the monthly chart.  After than the Yen will weaken considerable vs USD and Abe will get his dream Yen devaluation but that is a long way off yet.  Ideally we should see stocks weakness to help push the Yen higher but it may not be necessary.  If and when it does breakdown this pair may offer even more potential than some others, or at least a secondary chance to get in on the USD bear move for any who miss the current one and/or a chance to switch vehicles as GBP may also offer in due course.  Prior to that, as with GBPUSD, there is still a decent chance of further USD upside here so care is needed and a clearer signal is required to trade Short.  I am not yet in this particular pair.

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Yen strength has gathered overnight as the Nikkei weakened.  Now USDJPY is breaking a critical daily chart channel after a series of 1-2 retraces failed to break higher.  Next stop should be 10850 area and if we reach that then this will have the aura of a major bearish turn about it.

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27 minutes ago, CharlotteIG said:

Is it ready to turn or will it continue to decline?

The answer to the question depends on whether you are looking at it short term or long term.  Short term we could see some relief rally action, possibly to retest the channel breakout zone.  We could equally see a break below support and then a retest of that or price could just break through resistance a head into a major long term bearish move, which I would expect under any short term scenario.  So long term I am looking for a major bear move but short term we could see some rallies, which would offer good Short entry on turns at resistance points.

 

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16 minutes ago, elle said:

in the last few years it hasn't really done much

True.  This pair has been in a long period of consolidation.  After a massive bull run vs USD as Japan fell into stagflation and the Nikkei plummeted (from the late 1980s).  In fact if you overlay the Nikkei and USDJPY you will see a decent correlation, except that the Yen has remained relatively strong despite a strong stock market rally, which may have something to do with the fact that the Japanese central bank is the biggest owner or Japanese stocks...  Abenomics has held sway for some time now but try as they might they can't devalue the Yen.  I suspect this will happen but not as a result of central bank manipulations but a flight to the relatively safety of the USD when all hell breaks loose...

Before that the current consolidation Triangle must resolve up or down.  My lead scenario is down to set up a Head & Shoulders ending pattern, after which we will see that massive USD rally.  Either way a break of the long term down sloping trend line and the associated horizontal resistance will be a key signal that the much sought Yen devaluation (or rather the USD super rally) is under way.  Personally I will be seeking entries much sooner than that, let the games begin...

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USDJPY has broken out of a recent channel to signals a bearish move in line with other USD pairs and possibly, just possible, a bear phase for stocks.  Certainly the Nikkei and Dax are looking decidedly red.  Might yet get a short relief rally on both/all before the move really kicks off with a vengeance...  As will all things USD related I am tipping this one to run bearish for some time and some distance.  However I need to see a break of the 10450-500 monthly chart Triangle and associated horizontal support for the long term play to really be on.

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  • 2 weeks later...
56 minutes ago, Level_Trader said:

Target would be gap fill at which point I expect the short sellers to return

Agree, that is the obvious target for any bearish turn now, although a run up past that  and fall back that coincides with stock over exuberance can't be ruled out.

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  • 3 weeks later...

USDJPY getting interesting again. Price is currently down at a lower channel line.  A break here and of the nearby horizontal support could open the Bearish floodgates.  This would correlate with a further stocks bear phase.

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110 is back in the frame..the speed at which the turnaround has occurred suggests there may be some more upside with 11050 and potentially 11100 the target if it busts through 110 and at the rate it has moved in the last 2 days.. that is a real possibility. 

There is a gap from the weekend on the usd dollar index (around 97) suggesting the upside is likely to be short lived. This is very much a relief rally hence why equities are soaring and the yen is getting dumped however with it being headline driven (mainly by coronavirus reports), the market could whipsaw in both directions as it has done since Friday..

 

 

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14 hours ago, Level_Trader said:

110 is back in the frame

I agree, the relief rally on USDJPY continues.  The channel is holding.  The previous bear move gap is a likely to be closed.  The long term trend line could well be tested and if it holds and send price back down, with either or both stocks and USD also falling then that will be a decent Short opportunity.  I would be looking for either a straight 1-5 up or a more whipy A-B-C plus NMD at the turn and Stochastic & RSI coming out of overbought.  Until then sit back and watch.

14 hours ago, Level_Trader said:

There is a gap from the weekend on the usd dollar index (around 97)

I disagree with this as there is almost always a gap on DX opening because it closed when the underlying FX pairs do not.  I would want to see a clear gap on EURUSD and I don't.  There is one on GBPUSD but I think that is a breakaway gap on a stronger bearish phase.  I see USD remaining bullish for a while yet, maybe to 100.

1 hour ago, dmedin said:

How are you managing to trade something that's so unstable

See above but basically you do not trade a counter trend complex retrace, you wait for it to terminate, otherwise you get killed in the whipsaw...

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11 hours ago, dmedin said:

How are you managing to trade something that's so unstable?

I'm currently on the sidelines on this one watching to see how this plays out. Agree that the price action has been unpredictable last few days however we're beginning to approach key levels on this one. I'm of the same view as Mercury above that there is a potential shorting opportunity coming up soon... but for now the price looks like it could move a little bit higher.. 

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