USD/JPY DAILY ANALYSIS (THE WEEK AHEAD)
last week We made a big move to the downside, the week opened @106.118 and closed @102.010 Leaving the Yen 410 Pip stronger against the USDollar. Last week's move was do to the BOJ disappointment. The market was expecting a larger stimulus then what was announced with the BOJ only doubling its ETF purchases to 6 Trillion from a previous 3.3 trillion Yen. They left rates unchanged and didn't expand bond purchases. Rather governor kuroda sad that the BOJ will assess how negative rates has impacted the economy in the next meeting in september. Septembers meeting will be very important and we will probably see a lot of volatility in the Yen from now until then. Despite Kuroda saying there's still room to cut rates further, The market thinks that the BOJ has run out of options. We shall see but as for now I need to point out how the fundamentals and technicals worked hand and hand together.
On 7/21 there was a daily reversal at trendline resistance this was after a strong rally from july's lows @99.98 There was nothing fundamentally driving that really just some good US data at that time but if we look across the Yen pairs we could see Yen weakness. In my opinion there looks to be a shift of risk sentiment in the markets that of course has nothing to do with the BOJ. most of this year we have witnessed a risk off sentiment but if we look at the S&P 500 and other global indexes making all time highs could we be gearing up to shift into a risk on market. Keep in mind that the major 2016 Event risks has passed and investors will be looking to put there money to work, Meaning moving it from the safe haven assets to more riskier higher yielding ones.
I don't know if the Yen bulls are done we very well could see a push back down to 100 but I will be watching for a longer term reversal from these levels and I have a monthly chart that supports my thought of a reversal which I will publish. We could also see some profit taking or consolidation of last weeks move.
Note:
On 7/21 there was a daily reversal at trendline resistance this was after a strong rally from july's lows @99.98 There was nothing fundamentally driving that really just some good US data at that time but if we look across the Yen pairs we could see Yen weakness. In my opinion there looks to be a shift of risk sentiment in the markets that of course has nothing to do with the BOJ. most of this year we have witnessed a risk off sentiment but if we look at the S&P 500 and other global indexes making all time highs could we be gearing up to shift into a risk on market. Keep in mind that the major 2016 Event risks has passed and investors will be looking to put there money to work, Meaning moving it from the safe haven assets to more riskier higher yielding ones.
I don't know if the Yen bulls are done we very well could see a push back down to 100 but I will be watching for a longer term reversal from these levels and I have a monthly chart that supports my thought of a reversal which I will publish. We could also see some profit taking or consolidation of last weeks move.
Note:
- We are just above a 76.4 fibonacci retracement of last month's low to high.
- Will be watching today's close. If price closes positive then we will have a RSI 40 Hold could be indicative of bullish momentum.
- I will watch for a reversal candle on today's close.
- I will wait for the days close to determining a directional bias for the week
Comment:
We closed the day positive, with very little momentum. RSI held 40 a sign that we might see a retracement off last weeks move. I dont think I will be trading the USD/JPY this week unless we break fridays lows in which case I will look for short opportunities and more bearish momentum. A downside target would be 100.00 and brexit low @98.78 From where we are trading now I'll be watching for a bullish reversal I will be watching daily RSI to hold 40 and my bearish invalidation level is at @106.53
