Wednesday, October 5, 2016

The tidal wave is again turning for the JPY renewed weakness expected

The tidal wave is again turning for the JPY renewed weakness expected 

After more than 30 years of general JPY-strength the major tidal wave turned in late 2011 for GBP/JPY and a bit later for USD/JPY and EUR/JPY, as both of these pairs turned in early 2012. The weakening of the JPY got a helping hand from Prime Minister Abe.

We saw a serious weakening of the JPY into August 2014 for EUR/JPY, while the weakness continued into June 2015 for both USD/JPY and GBP/JPY.

EUR/JPY rallied from 94.10 on July 23 - 2012 to a peak of 149.55 on August 12 - 2014 and has since the peak at 149.55 corrected lower in a very complex zig-zag correction. This correction has shaved more than 70% of the 94.10 to 149.55 rally, but it finally looks as this corrective decline has come to an end and a new impulsive rally to above 149.55 is about to develop.

                                          EUR/JPY - Daily 

USD/JPY rallied from an all-time low of 76.02 in early February 2012 to a peak of 125.86 in early june 2015, before being cut in half over the last 16 months. Here to we are finally seeing some serious signs of the next impulsive rally to above 125.86 developing. 

                                          USD/JPY - Daily

GBP/JPY rallied from an all-time low of 116.82 in mid-September 2011 to a high of 195.88 in late June 2015 before a very large and complex correction took over. The correction from 195.88 has shaved 85% of the rally from 116.82 to 195.88 and we can not say for sure that the corrective decline from 195.88 is complete. 
As long as resistance at 132.44 and more importantly resistance at 133.26 is able to cap the upside, we could still see one more wave lower towards the 122.63 - 123.45 area before the long term corrective decline from 195.88 finally completes and a new impulsive rally to above 195.88 can take hold. 

As both the GBP and the JPY is among the weakest of the major currencies at the moment and we are near completion of the corrective decline from 195.88 the volatility will rise and the intra-day swings will be very hard to predict, so be careful and be flexible with this cross. It should however, just be a matter of time before the next impulsive rally takes over here too. 

                                          GBP/JPY - Daily - Bear count

                                          GBP/JPY - Daily - Bull count

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