260 5 2
It would appear so. Based on the brilliant chart by Safv6, I thought it should be possible then to analyse long term currency trends by EW. It appears to have completed a 3-3-5 expanded flat, with the C wave just over a 1.382 x of wave A, making a complete B wave. (And I've just noticed wave B within this wave is probably best labelled a 5-3-5 itself - no matter)
Nearest to this, and ALMOST an exact copy is the EURJPY             . The massive drop in this pair over the end of 2014 would appear to be the very beginning of an uptrend in the Yen, and the end of a 6 year cycle.
Early days, but it might be what makes DanV's long term analysis of the DXY             possible, or at least a big contribution to it, the Yen being the second largest portion (13.6%) and the largest occupant of the "other currencies" aside from the EUR (57%).
I don't quite know how trends are reflected precisely in currency pairs and there is a possibility that the current wave may a B wave, but I don't think so ... The trend was just ticking up into the end of last week, after what appears to be a first impulse wave in November/December 2014.

As far as fundamentals I have noted for a while that there there seems to be a gradual policy shift away from more stimulus, and printing, and "spreading doubts about the effectiveness of further action", although I wouldn't expect them to say it didn't work.

Sitting alongside this may be a very significant turn in global stocks. All connected.
Hi, I don't follow the chart derivation unless it is an attempt to make up qausi JPY index similar to DXY. Hence little puzzled in to the implication of your wave counts as they relate to JPY pairs.

I have CADJPY prepared for publishing which will do tomorrow suggesting a resumption of downtrend that that commenced earlier this year and reflected in varying degree in all JPY pairs. Almost spoiled for choice, But CADJPY and AUDJPY could be early of the block.

However, most striking id the USDJPY which might linger at current congestion zone whilst DXY makes retracement but upon completion I expect USDJPY to drop in a manner that might leave some gasping for air as I think it has hit the wall. This would only be averted momentarily if it takes out the high of this year with limited upside may be to 125. But it might not even make that.

So from that perspective your conclusion of turn in JPY is probably correct.

Thank you for sharing your analysis.
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Hey Dan. As for the derivation, I'm not sure either ... As mentioned it was an attempt at currency trends based on a chart by Safv6 here:
Unfortunately the links I added seem to have disappeared.
I think it's a kind of mean average of pairs, as shown.
It's a bit experimental, hence "I don't quite know how trends are reflected precisely in currency pairs", especially as you mention the wave counts. In theory I think it should work very well for the broader picture.
I made a copy as per Safv6 instructions and looked at a few currencies and thought, yes, that should work.
I chose the Yen as it's at historical lows, (and it also demonstrates very well how distorted the markets are due to Yen devaluation.)
An interesting way of looking at trends and so to trading opportunities.
DanV finitemonk
The resulting chart of price derived from all other pairs in the same basket as it were needs to reflect some element of its weighting otherwise it might be very distorted. However it is better than nothing.

Though I would be reluctant to do any in depth work on this. I personally go though each groups of pairs to manually gain feel of which one is likely to be strong or weak going forward.

I do agree with you 100% about YEN's depreciation has been most dramatic in its effect in DXY's strengthen in the early stage and then followed up by others more recently.

If there was to be unwinding of this by leverage funds then it would be be like a tide returning just as fast. The other thing to keep in mind is very high positive correlation between say SP500 and USDJPY which recurrently since April has been fluctuating in and out mostly out. That is suggesting warning sign and major top in SP500 and other Indices also imply YEN to reverse course.

Catching early reversal is not easy but most rewarding. So I am on high alert for confirmation on USDJPY to reverse.
One to watch for sure.
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Your right. The whole concept is broadly flawed, especially without stringent rationale.
I had a look later at say GBP, by the same method and it's apparently been in an persisting uptrend for a number of years (but that's because it's 'under the weight' of the Yen (& the Euro) It may be by fluke, in a sense, the chart presented here is actually right because the Yen is so out on it's own among the traditional currencies.
Playing around with adding and removing pairs, tho', the very basic idea seems a good window into the currency landscape.
PS. I agree with you as to the USDJPY. I haven't visited the pair in a couple of weeks, but it sure looks a bit ripe.
+1 Reply
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