Today, I will analyse the Yen with the use of my Hawkeye indicators. Interestingly, the Yen has recently broken out of a six month trading range on the monthly chart. Also, the fundamentals are that the Japanese economy is fighting deflation. So, they will continue to try and push their currency lower until this deflation is completely out of their system.
If we look at the monthly chart, you can see from the beginning of 2012, where the green dots came in, it’s been in an uptrend. In other words, the Japanese Yen has been weak, and the US dollar has been strong.
The USDJPY pair has gone from about 75 to over 125, which is a huge run. But more importantly, look at the dotted lines I have put on the chart. The dotted line marked a is drawn off the high of six months ago. And you can see that it consolidated for the period I have marked with a red circle. Also, you can see at the line marked b, it has broken out of that consolidation heading up past the high in 2007 (which is circled in a red over on the left hand side).
So, it looks again that this currency is going to break out to the upside. So, whatever you do, do not even begin to consider going short at this point!
Now, let us have a look at the weekly chart. First off, notice how I’ve I placed three cyan arrows to mark various great entry points.
Frankly, I could have placed five or six, because the uptrend continued on the monthly. So, if you simply bought the dips on the weekly, you would make substantial profits all the way up to where we are now. Without a doubt, there’s been easy money to be had in this pair.
Finally, let’s take a look at the daily chart.
Of course, since the daily chart is a faster time frame than the weekly, it gets a bit more choppy. But, yet again, I’ve marked three great opportunities to get long in this market with the cyan arrows. So, definitely consider buying the dips, and don’t go short until Hawkeye specifically tells you to.
And just as an aside, PLEASE try to trade the longer time frames. For example, the daily, and if possible, even the weekly. Unfortunately, most Hawkeye traders try to trade the faster time frames.
However, the money is not there. The money is in the longer hauls. That’s where the hedge funds are, and that’s where you should be.
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[The cyan arrows are for illustration only and do not form part of the software]