I update the USDJPY charts every day, but it’s been a while since we last took a look at the pair from 30,000 feet. In our May 17 Update, we noted it had rejoined its well-formed falling white channel and was headed for a tag of the rising white channel bottom — though there were important interim Fib levels with which to contend.
Otherwise, the downside targets originally contemplated are all in play: the red .618 at 107.86, the purple .618 at 106.50 and the red .786 at 104.92.
It turned out that breaking out of the falling white channel was a pretty healthy development for stocks — so much so that it did so again, and again, and again. Not that there is such a thing, but it probably set a record for backtesting a channel.
The net effect was that the rising white channel tag was delayed, coming in at a much higher price than if the falling channel were allowed to play out. The original intersection of the two was mid-late July.
Thus, even though USDJPY registered new lows, stocks were supported in setting new all-time highs.
USDJPY came within 0.81 of our 106.50 target last week, and has since rebounded sharply. Is the worst behind us, or is there more downside ahead?
continued for members…
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |