US Dollar vs Japanese Yen Forex Pair


Update 23/07/2015

This pair has enjoyed a rather spectacular bull run since the lows in 2011, moving in close correlation to the stock market in recent times, stateside at least. Medium term price moves have been somewhat ambigious but recent action has cleared the cyclic picture as far as I am concerned. First, lets take a look at a long term phasing analysis, weekly candles:

USDJPY_£__daily_23_07_2015There was a 54 month low (probably 9 year) in November 2011. Since then a strong bull has taken the dollar to the upside repeatedly over three distinct 18 month cycles, the last of which we are in now (of this current 54 month cycle). A low is due March/April 2016 which again, correlates with the equity markets which are also due to make a low at that time. Interest rate rise? Not until that low is made and price moves out, at least!

Moving onto the medium term, daily candles:

USDJPY_£__daily_23_07_2015_medThe most recent 18 month low was back in October 2014, again in line with equity markets. After a strong move out of that low price did meander somewhat, making cycle phasing a touch more difficult before clearly making a 40 week nominal low recently. The length of that 40 week cycle was 38 weeks exactly, slightly less than the nominal average of 38.97 weeks.

Now onto the near term, daily candles:

USDJPY_£__daily_23_07_2015_shortPrice moved strongly out of this 40 week cycle creating a first T2 target of 12574. Notably it has missed the target by around 1% and it is likely this first 20 day cycle is over. When a target is ‘undershot’ in this way it indicates the underlying trend is down, especially having missed it after a trough of 40 week magnitude.

A top is near in the 54 month cycle and I will be looking for chances to short the USD over the next few months. FLD projection boxes on Sentient trader give a target for the 40 day cycle peak, that is a possible shorting chance but be careful. A more conservative approach is to either wait until the 40 week low is breached and short below there or short after a break of the 40 week valid trend line, shown in green on the charts. I will update this pair in the coming weeks and months.

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