Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

When Will the Japanese Yen be Ready to Fall Again?

Currencies / Japanese Yen Nov 19, 2013 - 05:10 PM GMT

By: Submissions


Adam Lemon writes: The biggest story in Forex over the past 12 months – or to put it another way, the most profitable story in Forex over the past 12 months – was the dramatic weakening in both the JPY and the AUD.

Leaving the AUD to one side and focusing on JPY, which is more liquid and at the heart of the story, the narrative went something like this: Japan is in trouble, facing a future with an ageing, shrinking population and a frightened, unproductive younger generation traumatized by years of stagnation. Constitutionally unwilling to countenance mass immigration, Japan has no choice but to try to inflate away its problems by engineering a dramatic depreciation of its currency.

So far, so good. The political echelon signaled clearly for the first time that the central bank would target devaluation, after which the JPY plummeted, before stabilizing somewhat by the late spring / early summer. Some traders made a lot of money.

The fundamentals are still in place, although the political echelon has indicated it is content with the extent of the move for the time being. Moreover, it is dangerous for any country to devalue too openly. The big question is, how much further does the JPY have to fall, and when is this movement likely to resume in earnest?

We can try to answer this by turning to technical analyses of the JPY against its two largest counterparties by far, the EUR and the USD. Based upon the Bank of Japan’s basket, it can be said that USD/JPY constitutes about 49% of the basket and EUR/JPY a further 36%.

Beginning with the monthly chart of USD/JPY, we can see that after its strong upwards move, the pair has been stuck in a triangle all summer just under a logical resistance point at the swing high of 101.43:

The pair seems poised to continue upwards, and may be breaking bullishly out of its triangle right now. Two things are currently lacking: strong bullish momentum and a significant close above 101.43. When these factors become apparent, a bullish leg all the way up to 110.50 becomes possible. There is no need to pick the time, but we are not far from the start of 2014 nd early January often injects some strong momentum into the market.

The next big move up in USD/JPY needs to happen in conjunction with strong bullishness simultaneously in EUR/JPY. The monthly chart of this cross tells a different story:

Two bullish signs are the facts that the recent candles have not shown the same consolidation as in USD/JPY, and that the 50% Fibonacci retracement of the long-term downwards move has been breached to the upside. The problem is that we are approaching an area that was previously a distributive zone for the EUR, and we are approaching it after an already extended move. This cross can move quickly, but the indication in any case is that the levels around 138.50 to 139.12 are going to prove strong resistance. Ideally it would be good to strongly clear the 61% retracement and 140.00. However once that hurdle is overcome, a level as high as 165.00 can be targeted, with little standing in the way except the EUR’s own capacity to strengthen.

Looking at both the pairs together suggests that the next large drop in the JPY is not going to happen for a few months yet, late spring 2014 at the earliest and quite possibly not until 2015. We will need to clear 140.00 in EUR/JPY and 141.43 in USD/JPY with momentum. Once this happens though, we can target a depreciation of up to 8% in the JPY, which is a prize worth waiting for.

By Adam Lemon, Senior Analyst, and Chief Instructor at

About FX Academy
FX Academy is a comprehensive Forex education system conceived directly from the need for traders to learn about Forex trading at their own pace in a comfortable, interactive environment. Founded by the trading experts at, FX Academy offers traders of all levels the widest range of online courses to increase their knowledge of macro environmental trading conditions, trading concepts and strategies from core to advanced, heighten confidence and ability to trade profitably. For full details visit:

About Adam Lemon
Adam is the Chief Instructor at and trades Forex on his own account. He has worked in financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.

Copyright © 2013 Adam Lemon - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in