10.4 A Complete System

[MrLong]

Does anyone has an opinion on this this article from the WSJ regarding the yen ?

http://www.forexfactory.com/news.php?do=news&id=430191

Correctly marked out fib lines for USDJPY, on the Monthly chart price stopped at 38.2 and 200 EMA.

Are you suggesting we are heading for a reversal of USDJPY back below 100 and further down ?

I wouldn't bet against it, we have confluence of the fib and 200 ema on the Monthly chart.

[nanningbob]

I will give you my thoughts on the xxx.JPY for this week. As you know the BOJ will continue its bond program of adding 1% Yen to the economy every month. It has been a really nice ride for the last 7 months but we are now seeing the JPY break out of its depreciation cycle on some pairs. I fell this will cause one of two things. Some will range and some will continue their UT.

My first comments will be aud/jpy. I believe the aud/jpy will move back up and retest its Resistance area on the daily chart and then move back down later in the month. Depending on AUD fundamentals it will range between the two red lines for the summer or could continue its DT. Now that the JPY has established a pattern, weaken the first two weeks because of govt. bond selling and then strengthening last half of the month because the weakening is over. So I am expecting aud to range between those two red lines until something forces it out. The big question will be if the AUD continues to weaken for the rest of the summer or will it settle into a new range? That question will most likely be answered by how the Chinese government reacts to its slowdown. My viewpoint at this moment is the Chinese economy will slow down to the 6-7% growth range (like that is some bad thing, it is not) and the aud will set up into a new range of high and low as it adjusts to slower increasing Chinese economy. The same will hold true of the nzd/jpy since the nzd economy is closely tied in with the aud economy.

You will notice the nzd/jpy slowdown comes after the aud/jpy slowdown.

[nanningbob]

Cad/jpy has not broken its UT yet but may after this push up. Unless its push back up is stronger than last month then it has more upside than the aud/jpy and nzd/jpy. If the aud, nzd, jpy continue their DT then USD and CAD being stronger is no surprise.

[nanningbob]

chf/jpy has been ranging and probably will continue to do so all summer. Both are happy at this point of their relationship.

[nanningbob]

eur/jpy is the hardest to predict. It has been ranging but .......................

It could go up because something has to. No bad news coming out of Europe.
Trade war between Europe and China could make this one go all over the place.
A Euro country could go on the brink during the summer making it go all over the place.


????????????????? I will trade it but dont get caught in any big DD. It could get ugly.

I hope it ranges all summer and I can make a bundle on it.

[nanningbob]

gbp/jpy is going to be the battle between the banks. England grabbed the Canadian bank leader to lead them into something similar to what Japan is doing. Policy hasnt been laid out yet but the goal is clear. Lower the Pound. I expect these two to be ranging but the moves up and down could be fast and furious. It should be fun for those that want some excitement, for the less experienced get your heart medicine ready.

[nanningbob]

Of all the JPY pairs, this one should be the easiest to trade. The US economy is growing and seems to be heading for recovery. Fed debt has been halved from 5 years ago, poorly run businesses have been cleaned out, banks are flush with cash to loan, real estate market is starting to tick back up, things are staring to look up. Prospect of the US becoming the world's #1 oil producer with in 5 years and the coming end of QE with raising of interest rates. The USD will long term be the currency that will strengthen along with the CAD. CHF would strengthen too if the SNB wold let it. The Euro leaders dont want to weaken the EURO so if the Asian currencies continue to depreciate along with gbp by design you will see the EURO, USD, CAD strengthen .................. well until something goes bump.

ANYWAY usd/jpy will continue its UT and Japanese products will become cheap to buy in the USA again. They wont come out and say it but that really is their hope. Retake back some of the USA market they have lost to a big country close by who keep appreciating their currency so they can become a world currency power too.

[nanningbob]

Anyway look for your best xxx.jpy buy entrances over the next 10 days. Then dont get caught in the retrace after the middle of the month.

[fx800]

Of all the JPY pairs, this one should be the easiest to trade. The US economy is growing and seems to be heading for recovery. Fed debt has been halved from 5 years ago, poorly run businesses have been cleaned out, banks are flush with cash to loan, real estate market is starting to tick back up, things are staring to look up. Prospect of the US becoming the world's #1 oil producer with in 5 years and the coming end of QE with raising of interest rates. The USD will long term be the currency that will strengthen along with the CAD. CHF would strengthen too if the SNB wold let it. The Euro leaders dont want to weaken the EURO so if the Asian currencies continue to depreciate along with gbp by design you will see the EURO, USD, CAD strengthen .................. well until something goes bump.

ANYWAY usd/jpy will continue its UT and Japanese products will become cheap to buy in the USA again. They wont come out and say it but that really is their hope. Retake back some of the USA market they have lost to a big country close by who keep appreciating their currency so they can become a world currency power too.

Thank you, Bob and MrLong for your insights into the yen. Another factor in the equation is the stock market. If it continues its correction, flight to the yen will likely continue.

It will be interesting to see what happens in the few weeks.

[fx800]

USDJPY at key support zone between 100.00 and 100.60.

What happens next week will be crucial. If it bounces up from here, the uptrend continues. If it breaks below the support area, there is more downside to come.

Its either "the uptrend continues" or "I wouldn't bet against it" (i.e.reversal).

It is a battle between fundamentals (BOJ bond purchases) versus the technical (MrLong's usdjpy monthly chart with area of confluence which is very compelling).

Some people say fundamentals will win every time, but we shall see.