The Yen tells all? A technical analysis opinion

It has come to my attention that we are possibly preparing for the next leg down in the equities market which may cause the safe haven principle of dollar and yen strength. While there may be fundamental reasons for that scenario to happen this is a technical analysis post only.

First off, for all that follow correlations between the pairs, you probably remember that the yen pairs where usually the first indicator of in which direction the overall markets are moving in the last 6months of 2008. Ak_4x pretty much mentioned it every day with his brilliant method of playing pivots.

Secondly, for all those that know me (and those of you dont will know now ).... you know that I heavily rely on support/resistance areas and how price action behaves at those levels, be it candlestic patterns, triangles, etcetera. And this is where I came to realize something.

A strong support is where pa struggles to get through. Simple right? Going back on the monthly charts for the USD/JPY as far as my platform will allow me..(1988)...we see that support at around 98.00 for the USD/JPY pair. After the last 2months brought a consolidation above 98...we have broken through that level decisively recently and seem to be poised to retest the lows at the very least...if this temporary support area around 94 doesnt hold up.

Which brings me to my next point in correlations..it probably means more dollar strength if history wants to repeat itself (wonder what the books say). As a side note (would you buy 60$ per barrel oil if you could?)



opinions on this analysis much appreciated....be it reasons to agree or disagree

Agree, very strongly. It's even anough to catch the few headlines here and there from the last few months (and I don't catch more than that because all I care about and look at is intraday EUR/USD) to know that after the grand falls we now had a few months of overall sharp rises. btw, the EUR/USD daily chart itself now shows a double top from the past 2+ months. And we all know that the markets move in waves and not just down and then back up in a single movement. They should indeed go down again to find that second low somewhere before the whole trend really changes, and that's coupled also with the estimates of the crisis persisting through 2009.

Thanks for sharing your insight...it makes total sense.

you are that Romanian parasitologist/proctologist that claim to be american, right.

the usd/jpy and S&P correlation is far from perfect, look at correlation between GBP/USD and S&P if you want to make some pips, and don't mess with fundamentals if you don't understand them, oil has still a lot of room until it runs out of steam.

Arthur,

Those are nice looking charts. What platform is that?

thinkorswim, but i wouldn't recommend it for forex , it is ok for all the other stuff thou, a little expensive but still ok, i think.

Its good for options though.

Thanks, they sure look nice!