Hello traders! 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 futures chart, we are tracking a three-wave a-b-c corection, where 22000 resistance area 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 resistance area can be retested before another sell-off, so while it's trading beneath 114 region, we remain in the bearish 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!
Trade well!
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.
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As expected, we have seen a perfect Monday rally, so can we expect Monday flows to be covered now?! USDJPY is turning right away from projected resistance, so be aware of another sell-off, where stocks may suffer as well!
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Here we go! Market is selling off and risk-off mode continues!