ONE-TWENTY TWO - A collection of personal articles on financial markets including analysis you can use


Nov
28

Japanese Yen Strengthens “On Schedule”

written by Dr. Duru
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Today, market traders are noting that the yield on 10-year Japanese government bonds, also known as JGBs, dropped to 9-year lows at 0.72%. This weakness in yields stands in stark contrast to the Japanese yen’s (FXY) spate of weakness over the past two months and especially over the past two weeks. A week ago, I wrote that the weakness in the yen had reached extremes, so I expected a pullback in the yen crosses. This is indeed what has unfolded so far. The charts below point out some initial targets for starting to buy the yen crosses (short the yen).


Expecting a retest of 20 and/or 50DMA uptrends

Expecting a retest of 20 and/or 50DMA uptrends



My bearishness on the pound directs me to a deeper pullback to at least the 200DMA

My bearishness on the pound directs me to a deeper pullback to at least the 200DMA



Eventually falling toward 100 makes sense and a retest of 200DMA which had false breakdown earlier this month

Eventually falling toward 100 makes sense and a retest of 200DMA which had false breakdown earlier this month



Stubborn strength in Australian dollar suggests a shallow pullback in the ultimate funding currency play

Stubborn strength in Australian dollar suggests a shallow pullback in the ultimate funding currency play


Source: FreeStockCharts.com

Note that my return to bearishness against the British pound (FXB) was reinforced by the Bank of England’s recent Inflation Report. I will have a lot more to say on yet another fascinating BoE performance in the coming week or so.

In the meantime, I have already established very small shorts against the Japanese yen “just in case” my preferred buy targets never get hit.

Be careful out there!

Full disclosure: short the British pound, short the Japanese yen

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