The dollar edged down slightly against the yen at 118.11 Monday ahead of the Bank of Japan’s two-day meeting that will end on Friday. As such the Guggenheim CurrencyShares Japanese Yen Trust (FXY) rose 0.38% to 81.86. In fact, a closer look at the daily chart of FXY suggests that the currency is in an early stage of a new upswing that projects to 83.35 at a minimum but has an overshoot target near 84.70.
The graphic below is from our “U.S. Market ETF Trading Map”, show the near-term technical bias and trading ranges for FXY. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red. The yellow bars identify period of neutral or sideways trading pattern. Additionally, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading). Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.
Chart 1.1 – Guggenheim CurrencyShares Japanese Yen Trust (daily)
As indicated in the above chart, our “U.S. Market ETF Trading Map” is looking at FXY from a Buy side. Over the past few days, FXY has been trending lower in a short-term corrective mode as traders digested the December massive rally. Last week’s correction tested and respected support at the 38.2% Fibonacci retracement of the December-January upswing. That level roughly corresponds with the lower edge of the pink band. In accordance to the Japanese candlestick recognition, Monday’s bullish engulfing bar is a clear indication of demand overwhelming supply. Perhaps the positive Money Flow measure is the best illustration of the bulls’ case…Click here to read more.
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