USDJPY - price eyeing a huge close above 30yr trend resistance
Scroll out on the USDJPY monthly and we can see price pushing a trend break drawn from the 1978 low and that intersects along three lower highs (2015, 1998 and 2015) – we now see USDJPY has broken through the 30-year downtrend and will need a close above 116.70 to print a monthly close through this well-defined trend resistance.
This seems significant.
Shorter-term, we see price having broken the 2015 downtrend, and continuing to print consecutive higher highs and lows. The Bollinger bands are widening and the target from the wedge pattern is just above 130, although the 2015 highs of 125.84 would be stiff resistance.
The 138% fibo extension drawn from the 2011 low to 2015 high comes in at 144.35, so again, a break of 125.84 and we could be looking at some huge bullish trends. It obviously won’t happen overnight, if at all, but the monthly and weekly timeframes offer excellent oversight on the rhythm, feel and flow of capital – as it stands at the moment the USD bulls are keen to express a view on Fed policy through long USDs against the JPY, where the yield advantage Japanese pension funds can achieve through long US Treasury positions when hedged, is 132bp - 111bp above 10yr JGBs.
Is the UST bull market truly over? Well, there’s been quite the sell-off, especially in the front end, but further out the curve, I’d like a move in the 10yr above 2.66% (200-month MA), although that may take some real fireworks to get there..as it is I see signs the market might put on duration and start to bid up USTs soon, a fate that may well send USDJPY back to the trend support.
While I watch moves in the US bond market, on price action and set-up alone there’s a lot to like above USDJPY, and the monthly is showing signs that over a longer-term view we could be looking at 125-130. Policy divergence is the clear trade here and I buy the hawkish central banks and short the dovish ones – currency flow 101.
Keep this one on the radar, as a monthly close above 116.70 could really get the party started.
This seems significant.
Shorter-term, we see price having broken the 2015 downtrend, and continuing to print consecutive higher highs and lows. The Bollinger bands are widening and the target from the wedge pattern is just above 130, although the 2015 highs of 125.84 would be stiff resistance.
The 138% fibo extension drawn from the 2011 low to 2015 high comes in at 144.35, so again, a break of 125.84 and we could be looking at some huge bullish trends. It obviously won’t happen overnight, if at all, but the monthly and weekly timeframes offer excellent oversight on the rhythm, feel and flow of capital – as it stands at the moment the USD bulls are keen to express a view on Fed policy through long USDs against the JPY, where the yield advantage Japanese pension funds can achieve through long US Treasury positions when hedged, is 132bp - 111bp above 10yr JGBs.
Is the UST bull market truly over? Well, there’s been quite the sell-off, especially in the front end, but further out the curve, I’d like a move in the 10yr above 2.66% (200-month MA), although that may take some real fireworks to get there..as it is I see signs the market might put on duration and start to bid up USTs soon, a fate that may well send USDJPY back to the trend support.
While I watch moves in the US bond market, on price action and set-up alone there’s a lot to like above USDJPY, and the monthly is showing signs that over a longer-term view we could be looking at 125-130. Policy divergence is the clear trade here and I buy the hawkish central banks and short the dovish ones – currency flow 101.
Keep this one on the radar, as a monthly close above 116.70 could really get the party started.
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