The USD/JPY is trading in risk aversion mode. G7 leaders and EU Finance Ministers are meeting in Tokyo along with the IMF and World Bank to discuss the current global economic situation. Side meetings are also scheduled to discuss the continue stress to the Japanese economy caused by the strength of the JPY. The USD and JPY are both picking up momentum as they are beginning to be the favored safe havens as markets turn to risk off assets. Global growth and debt continues to weigh heavily on investors’ minds along with the worsening slowdown in China. This morning Japan reported a drop in household confidence and Core Machinery orders which worsens the Japanese economic situation.
In addition, the USD / JPY is too low can also have an impact globally. JPY is too high will cause difficulties for the Japanese to export, in the long run this will lead to a trade deficit and will affect Asia regional basis.
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So,
will BoJ following the FED? For the technical analysis today is USD/JPY is in a falling channel at it's D1 chart. But, stochastic has yet to reach the overbought zone, which means that dollar bulls aren't done with their rallies just yet. If you plan to play this long-term falling range, make sure you wait for stochastic to turn and point downwards. And good things come to those who wait...
:)
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Judging from USD/JPY D1 chart, this pair is showing "lower highs" and how the pair convincingly closed below the major support at 78.00 yesterday, it seems that the bears have full control over the pair as my analysis back in
September 4th. If this scenario goes well, then the next major support level is around 76. area.
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We can see that USD/JPY sellers took over when the 78.80 area failed to break higher. We may continue to see more movement down to 78.00, which is a strong area of interest that held as support/resistance as recent as late July. I especially like a continuation of USD/JPY weakness after Fed Chairman Bernanke made a case for more QE on Friday. This effectively leaves the Japanese Yen as the only major "safe haven" currency--at least with no major news expected from Japan in the short-term. Also, fears of global slowdown after recent weak economic data favors more capital flowing into Japan's capital markets.
So, I'm looking to short this pair on a retracement back up to the minor support area that held well last week and target the major support area mentioned earlier. My stop will be above just above last week's high.
Good Luck All
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Here we can see how the 78.0, a former resistance becomes support managed to do a good job. He's been able to completely block the bears.
It seems that here is the beginning where the bulls will take over. with the support of an already oversold stochastic, it is indicated that the bulls will be able to take USDJPY back to 79.0 or even 80.0
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