Will the BOJ continue to tolerate the weakness of the yen?
The bank of Japan (BOJ) has maintained dovish monetary policy in order to accelerate economic activities in the country. This decision has weakened the yen relative to global currencies because of the rising interest rates in other countries.
The Boj may be forced to intervene because of the steep surge in market yields and their weakening currency. There has been speculation that the bank is considering hiking rates to exit negative rates, which will strengthen their currency.
The usdjpy has been crawling upwards due to the hawkish fed forward guidance and the dovish boj. Since global investors are beginning to perceive a pause by the fed and a possible hike by the boj, we are now seeing price lose momentum as some investors take profits from previous trades.
This week is full of market moving news events, hence we will see a lot of volatility in the usdjpy pair.. Some of the major news event include
ISM Services PMI
Unemployment Claims
Average Hourly Earnings m/m
Non-Farm Employment Change
Unemployment Rate
I doubt if usdjpy can extend gains towards 154.650, here is why i think it will drop from here
(1) The bearish Bollinger bounce: Price is already at the upper band, from the snapshot below we can see how price reversed after touching the upper band previously. The stochastics is extremely overbought and we can see divergence between price and the stochastics indicator.
(2) Elliot wave analysis:
The most important thing about Elliot wave analysis is to accurately and objectively label the chart according to the rules. When we have an impluse followed by a correction, the next wave is expected to be an impulsive structure. After the (ABCD) correction we are expecting the next move down as shown in the usdjpy snapshot above.
Trade setup
Entry price: 149.82
Target price: 137.16
Stop price: 154.65
We will keep this idea updated as the price develops, it's very important to know when to move stops to break even.
Nedium Team
The Boj may be forced to intervene because of the steep surge in market yields and their weakening currency. There has been speculation that the bank is considering hiking rates to exit negative rates, which will strengthen their currency.
The usdjpy has been crawling upwards due to the hawkish fed forward guidance and the dovish boj. Since global investors are beginning to perceive a pause by the fed and a possible hike by the boj, we are now seeing price lose momentum as some investors take profits from previous trades.
This week is full of market moving news events, hence we will see a lot of volatility in the usdjpy pair.. Some of the major news event include
ISM Services PMI
Unemployment Claims
Average Hourly Earnings m/m
Non-Farm Employment Change
Unemployment Rate
I doubt if usdjpy can extend gains towards 154.650, here is why i think it will drop from here
(1) The bearish Bollinger bounce: Price is already at the upper band, from the snapshot below we can see how price reversed after touching the upper band previously. The stochastics is extremely overbought and we can see divergence between price and the stochastics indicator.
(2) Elliot wave analysis:
Trade setup
Entry price: 149.82
Target price: 137.16
Stop price: 154.65
We will keep this idea updated as the price develops, it's very important to know when to move stops to break even.
Nedium Team
