Recently I subscribed to Peter Brandt's blog, and this week he posted an item titled $USDJPY Has the Bank of Japan Capitulated?
At the point of writing these words I have still only skimmed his post, and the one thing that jumped out at me, stuck in my mind, and sparked my interest is that the USD/JPY is close to a possible break of 16 year lows.
The benefit of only skimming his post is that I don't remember the trend lines or patterns that he drew on his charts. Of course I am not saying that his charts lack interest or value, only that it is best to look at any market with fresh eyes, and no bias. His scenario may well play out perfectly, but that's not the point, and not important. Having read his book, I know that he doesn't like to use charts for market forecasting, only for identifying trading edges.
Here's what I see.
|Monthly candlestick chart going back to the mid-90s. Yes, fresh lows, but also a huge wedge, which warns of a possible bullish reversal back toward where the wedge began forming ie. the 120 area. A break above the trend line at 83 would raise the odds for the bullish scenario. That scenario, suggesting USD strength, aligns with the EUR/USD down trend that appears to be taking its first baby steps on the daily chart, and also the big picture 0.618 retracement top for the AUD/USD.|
I will be watching the USD/JPY more closely from now on. In fact, given that finely poised daily chart, I wouldn't bet against me placing some trades on it in coming days.