Sell Japan ! The charts show that both the Nikkei and Yen are at crucial points. The Nikkei is at resistance, while the yen is at support. Based on previous price action, this data may suggest that it may be time to long the YEN .
Cheers
Algo
NK2251! trade ideas
USDJPYYen is set to soar in coming months. There is a strong correlation betweeen Nikkei and yen as pointed out to me by @MA3STRO. Nikkei is forming an ideal triangle and this looks like a 4rth wave confirmed with no divergence yet in RSI.
Confirmation for Nikkei sell off beginsBearish TS KS cross, SAR to the topside supporting downtrend. US equities closed lower overnight and volumes low. Expect volatile swings with expected heavy selling.
Point thats USA QE3 for the Nikkei fall is an errorFor weeks I've been reading that the Nikkei, which has shown an explosive increase in its volatility the last few weeks, is due precisely the fears of U.S. Federal Reserve taping to reduce the bund purchases that are now of 85 billions per month .
While it is true that a reduction in bond purchases would tend to shoot upward the bond rates also is true that this will increase the value of the dollar, which would tend to put upward pressure on dollar yen cross and therefore benefit japanese exporters and with it the Japanese stock market.
From the fundamental point of view I do not find consistency with the argument, just as it is not consistent from the technical standpoint.
Looking at the performance of the Nikkei 225 and compare it with what have done, by one side, the USDJPY, then the Dollar Index and finally in the U.S. Treasury bond, we see that first, the only instrument that maintains a clear correlation with the Nikkei is the USDJPY.
However, while these two have been making higher highs since Sinzo Abe, Japan's prime minister, began to promote his plan to pull Japan out of its lengthy deflation, the behavior of the dollar and U.S. Treasury bonds have remained in a range, not a trend.
Besides, if we compare the movement of recent stock market fall in the Japanese yen and the dollar index with the previouse rise, we will see that the movement has been terribly stronger for the Japanese market than for the dollar yen and even smaller for the dollar index.
The climax comes when we see that at the time of the great fall for the Nikkei which has been accompanied by a fall of the dollar USDJPY (in a half of it's proportion) and the dollar Index, the bond prices in the U.S. have remained virtually lateralized.
If there is a change in the market expectations to QE3 be reduced from the Fed (and this was so correlated with what the Asian markets are reacting) don't you think that the prices of these bonds should have all ready plummeted as strongly as the Japanese stocks did?.
Nikkei - a piece of artFrom the technical point of view it is amazing. See our full analysis at www.investazor.com
Food for thought : NikkeiThe Nikkei is approaching historical resistance again. Are we expecting a significant correction ( 32 - 60 %) ??? What does it mean for the Yen ??
Cheers
Algo
Nikkei right in front of a dangerous seasonality: June #JGBubbleAs Kuroda's main kamikaze-aim is to trash the Yen @ a rate of 60 bln$ per month, by pushing inflation regardless of the risks, the Nikkei is acting in a full Giffen good move heading to 16k. It would not be the first time for June to become a top for the Japanese equities. Weekly RSI @ 94 is way overbought and unprecedented in at least 20yrs.
USDYENWe are long due to the bias from the government support, however as we edge closer to the noted levels we are going to see some level of sideway movement if not correction.
N225 Attack this market on the LONG side .. while onlookers stare in shock and awe & stay on the sidelines ... KEEP BUYING. No reason for this market to give back gains .. imo BOJ will expand QE programme into larger purchases of index linked ETFS & other equity related instruments.
I favour buying leading names in the N225 .. BANKS/ELECTRONICS/AUTOS/INDUSTRIAL MANAFACTURERS.
NMR is my favourite play .. levraged play on the N225 with kicker of JGB on balance sheet!
