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Abeconomics Continues to Fail – EURJPY ImplicationsThe proof is in the pudding, well it is in the globalized failing of quantitative easing. Abeconomics is no different. Japan Prime Minister Shinzo Abe will continue to feel pressure as his "three arrows" economic policy fails to push consistent economic expansion. Japan's economy shrank 1.6 percent on an annualized basis with falling exports and contracting consumer spending to blame. The calls for additional stimulus can be heard loud and clear, but the Bank of Japan (BoJ) will further risk market fragmentation if additional easing is lumped into the already giant program. According to the continuous contract of Japanese yen futures, Japan's currency has declined over 33 percent since 2011. This has not garnered the growth Wall Street expected it to outside of asset prices. As the BoJ erodes the purchasing power of the yen, import prices are increasing and it is stifling consumer spending. Tax increases are almost a no-go for the same reason. Since Abe was elected in 2012, Japan has only been able to grow by two percent. That's only a few tenths lower that the U.S. during it's quasi-monetary policy, now in its seventh year. Near-term outlook for EURJPY: The EURJPY has been rejected from resistance at 138.79 twice before its current retracement lower. Price action is hinging on support of 137.75, and a close below will signal further downside. Dynamic resistance can be found at 137.55 and 13.30, or the 50 and 72-EMA respectively. Price action support won't be seen until 136.93, which corresponds to the near-term uptrend line. A challenge of 136 is probable. If traders look to take the pair higher, a break of 138.79 could cause a momentum push higher after challenging the descending trend line. This could push the pair up to 139.90. In the longer-term: However, the BoJ could begin to talk the yen lower whether due to poor economic data or the fact that China's decision to devalue the yuan has implications throughout the region. A weaker yuan could force the Japanese central bank to weaken the yen further to try and gain an additional competitive advantage. The People's Bank of China (PBoC) will look to shake the yuan's tether to the U.S. dollar, and future devaluations are in the cards. The BoJ could go tit-for-currency-war-tat. Please follow me on Twitter @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
by CommoditiesTrader
2
Chart of The Day: USDJPY (7/22/15)The dollar-yen has been able to recover a sizable portion of yesterday’s ensanguine price action, following the dollar’s rejection from key technical resistance. Support for USDJPY remains clear with the Federal Reserve’s promise to hike rates, supposedly, sometime this year. With the Fed keeping traders guessing, the dollar remains in an upward trend as the potential for monetary tightening stokes demand. There also is the utter commodity smack down that is flashing signals of globalized deflation. Although, this underlying macro theme has been present for a while now. Gold is undergoing the largest rout is nearly 20 years, and West Texas Intermediate (WTI) crude fell back below $50 per barrel. The 4H chart for USDJPY shows strong follow through after breaking through a descending wedge (shown by the major descending resistance trend line and descending support). However, price action is beginning to chop as the pair snags 124 yen per dollar once again. The intraday chart suggests that dollar-yen will likely grind higher through the ascending channel. Nevertheless, traders should be weary. The ADX, or trend strength indicator, is showing that the current trend strength is easing a bit. If USDJPY fails to close above 124.14, the pair could retest price support at 123.75; and this would also cause a retest of channel support just slightly lower. A close above near-term resistance, USDJPY would have upside resistance targets of 124.50 and 124.70. If the pair broke down, ultimately closing below channel support, support will be sought at 123.47 (coincides with the 72 EMA) and 123.18. Note: The one thing that can upend the dollar is ongoing softness in U.S. economic data that will derail the presumption of a Fed funds rate hike. The geopolitical and global macro climate will likely make yen attractive longer-term, loosing over 60 percent against the dollar since 2012. Feel free to follow me @lemieux_26 Original Post: teachingcurrencytrading.com
by CommoditiesTrader
2
GBPJPY: Long for now but watch it around September 28thTime at mode weekly analysis of the advance since the low in 2012. Price has already tested once the most frequent price since 1991, and fell instantly, but now rebounded and is heading up again. There is an active monthly uptrend, but the price target has already been exceeded. It would seem as if this is a topping formation, and even if temporary, the decline that will unfold if this validates a terminal wedge, will be very sharp and at least headed to 171.067 instantly. I'm long GBPUSD, and GBPNZD, but going long here might pay off, keeping in mind we might be able to short it soon. I'll update the chart with my entry, for now, you can try going long at 188.6145 with a stop at 186.463 and no TP. Cheers, Ivan.
Long
by IvanLabrie
5
Looking At Ashraf Laidi's 40-Month CycleYesterday, Ashraf Laidi put out an interesting post on the USDJPY and a 40-month cycle. From April 1995 to August 1998, the pair rose just over 85 percent. In brief, in the mid-90s, the US were raising interest rates (who does that anymore? Psh), which made the dollar stronger following the recession of 1990. The Japanese yen was devalued, too, as their asset bubble grew bigger. The Japanese saw this as the cause of the "lost decade," while it could also have been blow back from the Plaza Accord in 1985. Nevertheless, the pair ultimately crashed 31 percent from it's 40-month cycle high. Following the Asian Financial Crisis in 1997, the Federal Reserve began lowering rates in 1998, briefly increased the Fed funds rate before rapidly lowering rates into the 2000 bubble bust and recession. (Which I believe will happen next). Fast forward to the current 40-month cycle, spanning February 2012 and June 2015. The pair has been able to gain a respectable 65 percent, and there is no reason why one would not BFTD; but, is the pair's fate remain the same as it were in the mid-1990s? Analysts take of a policy devergence, but really it's come to a rhetoric divergence. The Fed has yet to tighten monetary policy, and even if it does, Fed officials have opined that it would still be "accommodating" and largely based on market reaction. We very well could see a 25-50 bps increase in the Fed funds rate over the course of several months or a year, but that is when the true economic rot will fester to the surface; and the Fed will undoubtedly reverse course. The BoJ has admitted, no matter how many times Kuroda tries to revert course, that there are diminishing returns in regards to a weak yen. Quasi-monetary policy can only take economic growth to a certain point before fiscal policy takes the reigns, and we have not seen that from either country. Both central banks have embarked on massive QE programs; yet nobody wonders why in the same period the US is undergoing its slowest recovery from a recession, while Japan has had three recessions since the financial crisis. During the 40-month expansion, Japan has had three quarters of GDP growth matched with three of economic contraction. Central banks don't see to want to believe they are responsible for asset bubble, yet they are always the root cause.
by CommoditiesTrader
Dollar On Shaky GroundDollar bulls may be few and far between, as a potential rate hike has now become a "buy the anticipation, sell the rumor" play. Even the most hardcore bulls like Marc Chandler has taken a step back to rethink the dollar. After making a series of lower highs and lower lows, the dollar could very well test the lows near 93; while a series of resistance levels could snag any upside potential. Last night, a few BoJ officials wanted to move the markets with their words. For some unknown reason, BoJ Governor Kuroda blurted out that the yen was "very weak" as to lead the market to believing it was too weak. This is interesting on a few fronts: One, a weaker yen was modus operandi numero uno. It was not "very weak" when it was down 25, 30 or 35 percent, but that 40 percent mark is the sweet spot. Two, this comes at a very interesting point, following the G7 meetings. The market expects the Fed to increase rates solely based on non-farm payrolls and nothing else because, frankly, the data out of the US is borderline, if not outright, recessionary. The Fed will never hike rates into a stronger dollar. As I said many of times, the Fed will work its way into the currency war by taking down the dollar. But much like their gold charade, the Fed has someone else do their dirty work. The dollar is typically inverse of the yen, and by increasing the yen the dollar is almost guaranteed to fall by default. A falling dollar - in theory - supports the Fed's inflation projections. It also gives the Fed more breathing room to throw around the idea of a rate hike. Please visit my linked idea on the dollar. It is trading very much between S/R, while maintaining the downward trajectory. Still projecting the DXY with an 80-handle by mid-summer.
INDEX:DXY
by CommoditiesTrader
USDJPY: Top spottedSimple setup, initiate a short when the support is breached. We have a very strong decline after completing what looks like an expanding ending diagonal triangle in the 4h/daily charts. If price moves below the support level outlined in the chart, it will accelerate down, probably moving 430+ pips to the downside. As a bonus, crude oil seems to be moving up, while Nikkei falls, effectively boosting this trade, correlation wise. Will update with my entry and scale ins. Good luck, Ivan.
Short
by IvanLabrie
16
CADJPY: Neutral, probably pending upside to be seenCADJPY has been in a consolidation for some time, before launching a fierce uptrend, in what I consider to be a wave C impulse in a larger flat. I considered the move complete, but looking at how it behaved after topping, I suspect that the uptrend isn't complete yet. We can observe a series of smaller timeframe trends briefly putting the bears and the bulls in command, typical triangle behavior. Also, the daily and weekly rgmov remain signaling an uptrend, while price stopped falling when meeting with the lowest high trendline I drew from the lows, and we have a series of highs and lows where we don't observe a move past them, effectively suggesting coiling price action, yet to explode. The explosion will most likely be up if this is indeed a wave 4 triangle, but we'll see. For the time being, I refrain to trade this pair until it shows directional commitment on either side. Tread carefully! Cheers, Ivan.
by IvanLabrie
7
EURJPY: BOJ fueled short pt. 2We have interesting news releases coming out tonight, and thoughout tomorrow's session. The technical chart shows an uptrend that is showing signs of exhaustion after correcting the strong decline from the December high from March 16 onwards. The advance was halted when price reached an area of weekly low volume resistance, where the market was extremely one sided. These areas can reject price and stop the bulls' advance very reliably. Now the market remains motionless after a strong selloff, which confirmed an hourly downtrend signal, while the 4h chart shows a volume buildup on the lows, increasing selling pressure after the sharp leg down completion started a sideways correction. I expect to see a strong move coming out of this juncture, fueled by the news releases. 23:00 US USD FOMC Member Williams speech 1 FRIDAY, MAY 22 02:00 CN CNY CB Leading Economic Index (Apr) 1 0.2 n/a JP JPY BoJ Monetary Policy Statement 3 03:00 JP JPY BoJ Press Conference 3 06:00 DE EUR Gross Domestic Product w.d.a (YoY) (Q1) 2 1.1% 06:00 DE EUR Gross Domestic Product s.a (QoQ) (Q1) 3 0.3% 0.3% 06:00 DE EUR Gross Domestic Product n.s.a (YoY) (Q1) 2 1.1% 06:45 FR EUR Business Climate (May) 1 101 101 08:00 DE EUR IFO - Expectations (May) 2 103.1 103.5 08:00 DE EUR IFO - Current Assessment (May) 2 113.6 113.9 08:00 DE EUR IFO - Business Climate (May) 2 108.3 108.6 08:00 IT EUR Industrial Sales s.a. (MoM) (Mar) 1 0.4% 08:00 IT EUR Industrial Orders s.a (MoM) (Mar) 1 0.8% 08:00 IT EUR Industrial Sales n.s.a. (YoY) (Mar) 1 -0.9% 08:00 IT EUR Industrial Orders n.s.a (YoY) (Mar) 1 2% 08:00 EMU EUR ECB President Draghi's Speech 3 09:00 IT EUR Retail Sales n.s.a (YoY) (Mar) 1 0.1% 09:00 IT EUR Retail Sales s.a. (MoM) (Mar) 1 0.2% -0.2% n/a GR EUR Current Account (YoY) (Mar) 1 €-0.929B 12:30 US USD Consumer Price Index Core s.a (Apr) 1 240.79 12:30 US USD Consumer Price Index (MoM) (Apr) 2 0.1% 0.2% 12:30 US USD Consumer Price Index n.s.a (MoM) (Apr) 1 236.71 236.12 12:30 US USD Consumer Price Index Ex Food & Energy (MoM) (Apr) 2 0.2% 0.2% 12:30 US USD Consumer Price Index (YoY) (Apr) 3 -0.1% -0.1% 12:30 US USD Consumer Price Index Ex Food & Energy (YoY) (Apr) 3 1.7% 1.8% 13:30 JP JPY Bank of Japan Governor Kuroda Speech 3 13:30 EMU EUR ECB President Draghi's Speech 3 19:00 AR ARS Trade Balance (MoM) (Apr) 1 Previous ideas:
Short
by IvanLabrie
26
Nikkei: Bearish confluenceThere's a potential 8 bar downtrend about to confirm here. If we see a swift move down from this level, we can expect the Nikkei to travel down, and fast. Technically, you can enter shorts now, with a tight stop, but the 8 bar signal isn't confirmed yet. Target on chart, for now an estimation, but possible. Wait for confirmation if trading it. Might offer good clues for the yen traders too. Thanks to Tim West for bringing it back to my attention yesterday. Good luck, Ivan.
FX:JPN225Short
by IvanLabrie
14
GBPJPY: Extended fifth wave advance and time at mode short setupWe can observe a clear five wave advance from the lows, with wave 5 being the largest, almost reaching 1.618 of the distance from point 0 to wave 3 high, which is the typical distance wave 5 travels. These extended fifth waves often produce a very sharp and steep retracement that swiftly moves price down to wave 5's second wave, or even wave 4 of the whole advance. Rgmov is showing clear divergence, which is a strong bearish signal, while we also observe a time at mode uptrend target expired, and one more larger timeframe target about to expire at the open on Sunday. I'll place a short fine tuning the entry from the 1h chart on Sunday. Good luck! Ivan.
Short
by IvanLabrie
7
USDJPY: price at the daily mode - bar by bar analysisUSDJPY offers an attractive short trade, as long as it stays under the daily mode level at 119.635. I'm looking to short under the previous hourly low for the time being, with a very tight stop to maximize returns. We can place a reverse position above the resistance line, in case it reverses and continues to range. It's a good way to hedge against unexpected volatility. Will update with an entry. Update: Daily roadmap: If this level doesn't hold now, I suspect we might see some bullish continuation, exploring the upper end of the range. Said and done...Now, waiting to figure out what to do. Either buy a correction, or sell OS.
Short
by IvanLabrie
18
CADJPY: UpdateSeems like this pair will offer a perfect short opportunity anytime now. As depicted in the chart, we can see that price reached a critical resistance level after completing an AB=CD pattern from the low to the sideways correction start and end. I'll post if I find a good entry opportunity with good risk/reward ratio asap. If aggressive, you can short now under the low and target the horizontal red dashed line for taking partial profits, but I prefer to wait for a cleaner entry, fine tuning from the 4h and 1h charts. Keep in mind that Gov. Poloz is speaking tomorrow, in 8hs from now, so the market might wait for that event to increase momentum and turn one directional. Good luck! Ivan. Update: Seems like the perfect short entry is near: Taking a small position with a tight stop once time expires.
Short
by IvanLabrie
20
GBPJPY update: targetsAn addendum to my previous 'Waiting for the perfect short' chart. This chart describes the different projection techniques that I used to determine targets and potential retracement zones in this pair. I'm short from 177.569, with a break even stop and will scale in every chance I get. This corrections will be easily foreseeable using time at mode in lower timeframes, and I'll update with them in due time. I expect to hold this trade open until the weekly signal expires at least.
Short
by IvanLabrie
29
The Big Bubble - Correlation S&P500 vs Treasury 30y2007-2012: Convergence between S&P500 trend and yield on Treasury 30y USA: - Downhill stocks leads to a reduction in yields on the bond market . The flow of money coming out of the US stocks and goes to US bonds for the "safe haven" - RISK OFF. - Rise in share prices on stocks leading the market yield bonds to rise due to the vendite.Flow of money out of the US bond market and goes on US stocks - RISK ON. START THE BUBBLE: The first divergence for Fed QE & BoJ: A rising index corresponds to a fall in yields = excess liquidity in the market - Bubble begins to swell and then be absorbed THE BIG BUBBLE: The divergence between performance of the stocks and lower yields on the bond market is the highest ever. The bubble is always more swollen and the two lines more and more divergent. A Fed rate hike (and therefore yield) approaches the two lines (seen in early 2015) but if this were not enough the bubble may deflate and bring down the stocks..fly to normality?! BE CAREFUL
FX:SPX500Short
by guado77
GBPJPY: Waiting for the perfect shortAs the title describes, I'll publish a suggested short entry once my setup confirms. For the time being observe the price action and how the selling is outweighing the buying on each swing. This is inherently bearish, and to make things worse for the bulls, Tim West's proprietary indicator RgMov is plotting new lows and a strong downtrend on the daily chart, ahead of price which is currently ranging. The weekly chart shows intense coiling, which will eventually lead to an explosive move to the down side. I'll update the chart with entry, exit and stop loss values once it confirms. Cheers, Ivan.
Short
by IvanLabrie
32