How Low Can It Go?
- Posted by TheArmoTrader
- on February 3rd, 2013
The Japanese Yen has been in a free-fall. As I noted a few weeks ago, the Yen was in midst of a major trend change. Since then, the Yen ($USDJPY) is up another 7.5% (the other Yen pairs, $EURJPY & $GBPJPY are also up big over the past few months). Even though the Bank of Japan has not yet initiated any new action (IE- QE, NGDP Targeting, an “Evans” Rules, etc), the “talking of the Yen” down has worked, mainly because the recently elected Prime Minister of Japan (Shinzo Abe, or as I like to call him, Honest Abe) has favored monetary easing & threatened the independence of BoJ.
Just from a $MACRO perspective, I don’t think this deprecation of the Yen is going to last unless the BoJ and/or the Japanese Government seriously act on the proposed measures (and as Noah Smith argues here and here, this isn’t likely) without any drag from either side (monetary or fiscal). Bond markets seem to favor my view, as yields for JGB have not really moved up much, if at all since the low of this current rally in the $USDJPY (low was in September 2012).
However, simple technical analysis says not to short the Yen despite my fundamental view. There still is no reversal sign/pattern, relative weakness, or a blow-off top. In fact, the $USDJPY is in midst of its best rally (Counting from low of current trend to high) for the past 10 years (percentage wise), being up a little more than 20%. That’s a bull market, and one with force, and something I do not want to be short (yet). I’m still on the sidelines waiting for an opportunity, if it arises.
Here is an updated chart of the $USDJPY (10 year, monthly chart) with some new possible resistance areas to watch out for.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry "TheArmoTrader" Khachoyan is currently an active trader, investor, market commentator, and Finance-Twitter participant. He started being involved with financial markets in September of 2008. He concentrates on using technical analysis and an understanding of macro to determine his trades and investments. He graduated UCLA with a degree in Political Science in 2013. The stock market to him is one of the greatest inventions by man.
- It Pays To Wait
- When A Failed Recovery Is All Right
- Is The US Dollar Setting Up For Another Big Run?
- There’s One Commodity Surviving The Recent Slaughter
- Oil Is In a Bear Market & It’s Looking Like It Will Stay There
- You Probably Shouldn’t Freak About The Weakness In Manufacturing
- Gold Is Still Looking Like Death
- What Have The Markets Done & Where Can We Be Heading?
- Return From Hiatus!
- The Sky Is Always Falling: Why All Economic News Is Bad
- Is Alibaba About To “Pull a Twitter”?
- Some Long-Term Charts To Keep An Eye Out For
- Are Defense Stocks Better Than Gold?
- Time To Enjoy Some Sam Adams?
- When Was The Last Time The Market Tripled?