khansalarehsan
Long

Medium to Long term plan for USDJPY (Long)

FX_IDC:USDJPY   U.S. Dollar / Japanese Yen
USDJPY             offers a good opportunity to go Long and here are the reasons that support it.
First I review USD markets.
US 10 years Yields has been depreciating all the way since 1997 until Brexit where it bounced and just in 2018 it appreciated from 2.412 (1 Jan) to 3.24 about 35%.


In the chart above see how US10Y             after 7 months of consolidation made a breakout recently.
Looking at 30 years US yields is also presents the same picture of the US Markets.
This market also has been consolidating since 204 and just last week a massive breakout. It reached 3.249.


Next market to review is US 10 years Bonds. Look at the break lower on this market too. This is Weekly Time Frame. A negative correlation is expected between US bonds and FX.


Therefore if US Yields has been appreciating and US bonds has been depreciating significantly, particularly in the last week, hence we expect USD to gain soon.
In the chart above see how much room Bonds have to fall.


This is an all-time USD weighted average.

By the look it shows that is going down but see how many attempts it had to go higher since 2014.
Looking at the daily TimeFrame , it has a difficult job to break all these layers of resistance, but considering the current Yields and Bonds situation it is likely to see these levels to be broken too.

On a 4 hours TF it has just passed the midband of the most recent channel and it has some room before it gets to the upper band of the channel.

Bottom line: If Yields and Bonds made a massive breakout, we should see the same thing in the FX or USD weighted average. That has not seen yet.
For DXY             also it has passed 95 level again last week and this level has been a strong support and resistance for a long time.

So DXY             can get to the upper band of the channel easily as the main resistance has just broken last week.
Now let's look at Japanese Yields. This markets is almost the same as US 10 years yields. It has been falling since 2006 and just like US10Y             Turned around since Brexit and has been consolidating all 2017 and 2018.

If I zoom in you see how just a few weeks ago it broke the consolidation area an found the upper band of the wedge a a support and just last week it made a very clear breakout.

Also see Japanese Bonds. Last week it continued going lower and it made another fresh new record low.

What we can expect from JP10Y             and JP10             is that YEN will be depreciating soon but we we have seen over the last week was exactly an opposite thing.
This is YEN Weighted average (Monthly) all-time.

In the above chart see how all 2018 it has been trying to go higher but it could not.
Looking at the weekly TF see how it bounced last week, although the expectation (based on Bonds and Yields) has been for this market to go lower.

It has now a falling trend line (red line) acting as a resistance and EMAs and a parallel of the Modified Pitchfork as resistance. A bit of hard work if it wants to go higher.
But now let’s look at the Daily.

I was expecting this to be a bearish market last week. You can just ignore the last 5 candles and that could have been a very bearish market. But later in the week US equities on THU and FRI             were falling and that caused YEN to gain a bit.
For instance see SPX             and also see how it is visiting the support now.

This is Nasdaq.

The lower the US equities go the higher YEN goes.
This is 4 hrs             YEN weighted average and I think the upper band of the channel is a good spot to see YEN pulls back.

Reasons that I believe YEN is like to pullsback: 1) JP10Y             is on a record high after a long time 2) JP10             is at all-time record low. 3) US10Y             and 4) US10             made massive breakouts 4) SPX             is sitting at a support.
But now let's look the last two key fundamental YEN related charts. 1) NIKKEI 2) GOLD            
First this is Nikkei futures and see how it SEP it make a clear breakout of the resistance

Going into the weekly Time Frame we finished the first week of OCT with a shooting star which is not that good for YEN bears. but again that happened on THU and FRI             followed buy US equities sell off.

Going to the daily Time Frame Nikkei is likely to bounce here too as it reached the rising trend line and EMAs.

so not encouraging for YEN bears but a bullish market on Nikkei on early next week is what we need of YEN to fall.
People think Gold             cannot fall anymore and indeed it can if we see Dollar rising and Yen falling. In fact YEN and GOLD             are positively correlated. Here is the weekly Gold             .

Here you can see the correlation between YEN and GOLD             and see how this correlation lost for the last couple of months. GOLD             falling but not YEN. All bonds and Yields suggest YEN should fall too. If YEN falling and USD rising then we can see 1100 on GOLD             .

This is USDJPY             and see how this chart on weekly looks like US10Y             and JP10Y             . Breakout and then upper band of the wedge acts as a support and then continuation higher.

This is JP10Y             vs USDJPY             . See how USDJPY             was supposed to be a very bullish market at the breakout time.

Plus I do not the look of the last candle to go long USDJPY             and I am going to wait for a bullish signal on a shorter Time Frame to go Long.
113.188 we have a strong support there plus that is where it visits the EMAs again. It might offer a good opportunity to go Long.



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KHAN
Comment: Just entered into this trade ...!
Thank you. Excellent information
Reply
@ELKOLET, I am glad that found it useful, Thanks
Reply
ELKOLET khansalarehsan
@khansalarehsan, just joined the forum and will be following currency streams. Regards
Reply
Good one Khan sir, good luck, will keep an eye on it. thanks.
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