chessnut

USDJPY in Bullish triangle - EW

FX:USDJPY   U.S. Dollar / Japanese Yen
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USDJPY is not impulsive downwards, yet not impulsive upwards. The latest bearish action has nullified the chance of trend continuation - for now, as it seems wave E of the triangle completes in zig zags.

This could spell trouble for the fragile global economy, as triangles are quite reliably terminal moves. this could be the USDJPY's last breath scraping new highs before larger deflationary pressures take hold.
Hi Chessnut, could you explain this a little more? What is the 'trouble'? That $ gets too strong or that it gets stronger then ditches due to 'deflationary 'pressure'? What would that pressure be? Sorry forex is not my forte
Thanks for any clarification
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chessnut johnrfraser
Hi John,

Arguably in a deflationary environment the yen will be of the strongest currencies out there, stronger than the USD. The BOJ has been fighting hard to keep it weak.

Deflationary pressure is slowing of the global economy.... stocks produce less dividends, therefore they become worth less and are sold for currency. As stocks fall the economy becomes worse, forming a chain reaction....

I dont mean to say that EW analysis causes trouble obviously, but It does forecast trouble at this point, and being one of the only TA very much in touch with the crowd, it should be considered as fundamentally important.

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johnrfraser chessnut
Thanks so much for your explanation.
If the chart suggests weakening JPY (break out upwards as per your arrows) doesn't that mean BOJ has succeeded in their task? And by your definition, if JPY is weakening against USD does it not imply the economy actually isn't deflationary?
Or are you saying that failure to reach 'd' implies a bearish turn down and failure of this wedge pattern, hence strengthening JPY?
Thanks again.
Reply
chessnut johnrfraser
I do forecast that the USDJPY will rally to a final high as per the chart, but you see the rally will be the thrust of an EW triangle. historically, triangle thrust are terminal moves, meaning they are always the last move of a trend. The weak sideways coiling action of a triangle is the drying up of liquidity in a spent market. It implies exhaustion of the overall trend.
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