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Macro - Princes of the YenIdea for Macro: - Currencies lead stocks. Get the dollar right, and you get most things right. Few things are above the dollar in hierarchy of economic cycles. - I have been following and studying the dollar for a while, in ideas like this one: - However, there is another currency of great importance - the Yen. - Japan's Central Bank is the creditor of the world, possessing zero-negative interest rates for over 20 years. - The Yen Carry Trade is when investors borrow yen at a low interest then purchase either US dollars or currency in a country that pays a high interest rate on its bonds. These traders earn a low-risk profit. These traders may even invest the US dollars or EM currencies into higher yielding assets of that nation. - The Yen is the first currency that investors would demand before a new bullish cycle. - However, there is a finite amount of liquidity in each carry trade cycle, and once it is spent, it must inevitably be renewed. I believe we are at the end of such a cycle: Just ask yourself why is there such dollar demand, if indeed there was lasting inflation expectations and too much liquidity? Nikkei: - Nikkei's recent enormous rally left me scratching my head at first. It had been in a year long bear market, erased all of its losses of the year in 2 weeks in a rally which saw a multi-year top, then lost it again just as fast. Can anyone explain why? I think I can now. - I think Nikkei's last huge rally was actually the unwinding of the Yen Carry Trade, which would send the yen crashing and Japan's stock market to consequently rise. - Each global crash is first preceded by an inexplicable blowoff top in Nikkei (effects are pronounced after 1999, when Japan introduced zero interest rates). Yen carry trade unwind. We are very close IMO: - As of now, the Yen had a similar structure before the 2018 and 2020 crash. The cycle is, buy up/borrow yen for the Yen Carry Trade, buy US/EM equities, until the liquidity is all spent. Then when it's spent, unwind for US dollars (and bonds with said dollars), crash equities while buying up the yen, repeat. A great bear always follows the Yen Carry Trade Cycle. - The Yen is a good indicator of global liquidity, as all liquidity must first flow through there. - Also, specifically to the yen - JPYUSD. It should be bought as equities suffer a drawdown, in preparation for the next cycle. The Princes of the Yen are making their move. GLHF - DPT
by UnknownUnicorn1043646
4
USDJPY Daily Analysis, Market still in consolidative rangeHello everyone, as we all know the market action discounts everything :) _________________________________Make sure to Like and Follow if you like the idea_________________________________ The USDJPY pair started this session with a Bullish move driving the price back to 110.08 from 109.74, The Bulls now are eyeing every move of the market waiting for the opportunity to push the price and close above the 110.00 levels for creating a support zone at that level that would be able to help the market back to the 111.00 level. If we applied the Elliot wave theory to the market we can see that the market is having its 3rd impulse wave right now which could be the move that drives the price above the 111,00 level. Different Scenarios for the market Scenario 1 : The price has reached the resistance zone from 109.92 - 110.08, The Bulls are trying to power up in the hope for a breakout of that zone where this could indicate a start for a next Bullish move that could lead the price near the 110.625 resistance like where the Bulls will test the Bears hoping to start a big bullish move that could lead the market back up to the 111,00 level. Scenario 2 : The price has reached the resistance zone from 109.92 - 110.08, The Bears are trying to take control back from the bulls in hope of driving the price back down, the battle is still going at that resistance zone, In case the Bears got control then we will see the price go down to the first support line at 109.750 where the bulls will have to defend for any hope to end this sideways move in their favor. Technical Indicators showing : 1) The market is above the 5 10 20 100 and 200 MA and EMA (Bullish sign), but still below the 50 day MA. 2) The RSI is at 52.31 showing Neutral signs but the market does seem to be gaining more strength. 3) The ADX is at 10,16 showing that the market is not in a trending state yet, With a positive crossover between DI+ (22,14) and DI- (20,11). Support & Resistance points : support Resistance 1) 109.75 1) 109.92 2) 109.59 2) 110.08 3) 109.19 3) 110.62 Fundamental point of view : A combination of supporting factors undermined the Japanese yen and assisted the USD/JPY pair to gain some positive traction for the second successive session on Monday. A goodish rebound in the equity markets dented demand for the traditional safe-haven JPY, which was further undermined by the worsening COVID-19 situation in Japan. Apart from this, weaker PMI prints out of Japan further acted as a headwind for the JPY. Japan PMI Manufacturing eased from 53.0 to 52.4 in August and the gauge for the services sector dropped sharply from 47.4 to 43.5, marking the worst reading in 15 months. This added to worries about the economic fallout from the continuous rise in COVID-19 cases. Bullish traders further took cues from a modest uptick in the US Treasury bond yields, tough the ongoing US dollar profit-taking slide might cap gains for the USD/JPY pair. The uncertainties tied to the COVID-19 situation might have forced investors to reassess the timing of the Fed's tapering, which, in turn, prompted some USD profit-taking. According to FXSTREET This is my personal opinion done with technical analysis of the market price and research online from fundamental analysts and news for The Fundamental point of view, not financial advice. If you have any questions please ask and have a great day !! Thank you for reading.
by GabiDahduh