Is the Yen Starting to Crash?
Diupdate
There have been big exciting moves in the Yen recently. This post will look at some scenarios this may lead to.
First, let's take a big overview of historic Yen trends.
Since I'm going to be discussing this from the perspective of a pending Yen crash to keep things simple for people unused to Forex quotes I'll use inverted versions of the charts. Because to forecast a crash in JPY is to forecast a huge rally in XXJPY. Which can seem a bit confusing if making a bear case with lots of arrows pointing up.
So here's USDJPY inverted.
This has the potential to turn into a really bearish chart. If all legs of the USDJPY trend have completed that we might see it correcting the 76 fib.
That's a long way down and since in a bullish scenario we'd be looking at a wave C correction, this would be expected to be a in crash style.
JPYUSD looks like it could be forming a head and shoulders pattern and be due to head into a really harsh mean reversion.
When we look at it from a large perspective like that, the moves we've seen recently are rather small and fit well inside the expected context. If we're making the break of the neckline in a big head and shoulders, selling should be strong.
This chart is very much a chart of context. If we look only at least last decades then it'd appear the Yen fall has been massive. it looks like it'd be reasonable to think we may be due to bounce.
But if you look at it on a far larger scale, it's evident there's would be much more to fall to retrace the massive rally there was before we went into this long slow (Topping?) range.
Yen downtrends broke various important levels last year. For a while last year I'd been really bullish on the Yen because it was at what I thought should be great support levels. That didn't last very long. It hammered through my support levels and kept going. The simple "Buy the dip" trade failed a long time ago and now we're threatening multiple decade breakouts.
Viewed against other majors Yen is at or breaking multiple year lows.
Through last year we've hit a lot of levels we'd expect buyers if the trend was to continue and we increasingly see various typical signs of uptrend failure over the Yen crosses.
So what might a Yen break look like?
Well, we can perhaps get a bit of a preview using the CHF. JPY has already broken against CHF and is at all time lows.
Across the board the Yen is on the cusp of firing lots of bear break signals.
In terms of tactical trading, I am always extremely cautious of false breakouts and excessively strong moves coming close to the end of moves. I'm feeling really bearish on the Yen but also wary that if these turned out to be false breakouts the market could be liable to move extremely fast against me.
I think we're now into the area where a big decision is going to be made. If we've not seen the big impressive capitulation finish to this Yen move, then there's a real chance the Yen begins to crash upon breaking the pending support levels.
At 150 I wrote up the case for a possible big USDJPY breakout. I think we're now at the real test point for that.
Read the USDJPY bull case below:
First, let's take a big overview of historic Yen trends.
Since I'm going to be discussing this from the perspective of a pending Yen crash to keep things simple for people unused to Forex quotes I'll use inverted versions of the charts. Because to forecast a crash in JPY is to forecast a huge rally in XXJPY. Which can seem a bit confusing if making a bear case with lots of arrows pointing up.
So here's USDJPY inverted.
This has the potential to turn into a really bearish chart. If all legs of the USDJPY trend have completed that we might see it correcting the 76 fib.
That's a long way down and since in a bullish scenario we'd be looking at a wave C correction, this would be expected to be a in crash style.
JPYUSD looks like it could be forming a head and shoulders pattern and be due to head into a really harsh mean reversion.
When we look at it from a large perspective like that, the moves we've seen recently are rather small and fit well inside the expected context. If we're making the break of the neckline in a big head and shoulders, selling should be strong.
This chart is very much a chart of context. If we look only at least last decades then it'd appear the Yen fall has been massive. it looks like it'd be reasonable to think we may be due to bounce.
But if you look at it on a far larger scale, it's evident there's would be much more to fall to retrace the massive rally there was before we went into this long slow (Topping?) range.
Yen downtrends broke various important levels last year. For a while last year I'd been really bullish on the Yen because it was at what I thought should be great support levels. That didn't last very long. It hammered through my support levels and kept going. The simple "Buy the dip" trade failed a long time ago and now we're threatening multiple decade breakouts.
Viewed against other majors Yen is at or breaking multiple year lows.
Through last year we've hit a lot of levels we'd expect buyers if the trend was to continue and we increasingly see various typical signs of uptrend failure over the Yen crosses.
So what might a Yen break look like?
Well, we can perhaps get a bit of a preview using the CHF. JPY has already broken against CHF and is at all time lows.
Across the board the Yen is on the cusp of firing lots of bear break signals.
In terms of tactical trading, I am always extremely cautious of false breakouts and excessively strong moves coming close to the end of moves. I'm feeling really bearish on the Yen but also wary that if these turned out to be false breakouts the market could be liable to move extremely fast against me.
I think we're now into the area where a big decision is going to be made. If we've not seen the big impressive capitulation finish to this Yen move, then there's a real chance the Yen begins to crash upon breaking the pending support levels.
At 150 I wrote up the case for a possible big USDJPY breakout. I think we're now at the real test point for that.
Read the USDJPY bull case below:
Catatan
Huge reaction off 160. Whether or not this support holds I think will be critical to the overall trend.
Either we break and a high is made or we bounce and we might see much more to come.
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