Today we will talk about Risk-Off mode over NIKKEI225 and USDJPY , where we see a tight positive correlation!
As you can see, the main driver for the USDJPY sell-off was NIKKEI225, which may continue later this week, since we have seen an impulsive five-wave decline. In EW theory, after every five waves, a three-wave pullback follows and we can already see an a-b-c correction in progress, where wave »c« is still missing, so be aware of a Monday rally towards projected resistance areas, from where we may see another sell-off in the stock market and consequently also in the USDJPY!
That said, in the NIKKEI225 chart, we are tracking a three-wave a-b-c corection, where 22000 can be tested, before we may see a sell-off continuation! So, as long as it's trading below 22780 highs, we will remain bearish!
If we respect correlations, then it's similar with USDJPY , in which we think that 113 area, specifically 113.25 – 113.35 can be retested before another sell-off, so while it's trading beneath 114 region, we remain in the mode!
Early Monday moves are usually fake, so if we get a Monday rally within projected wave »c«, then this would be a perfect three-wave corrective rise that can be easily covered in the next days, when we expect another sell-off!
Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.