Yen Outlook For The Week – Must Read

This week’s focus is on Yen after the 8.9 Earthquake last Friday, reports of devastation and subsequent reaction from BoJ will determine the fate of this currency.

Last week we were short EURJPY and EURUSD, these trades were benefited by the situation in Japan. Even though we end up with +405 pips as a result, I felt a sense of guilt taking these profits. Hence I’ve decided to donate all profits from last week to Japan relief via http://bit.ly/gaR9wy

Yen Technical Analysis

Lets look at EURJPY monthly chart, price touched resistance earlier at 115.50 and pushed back lower. For EURJPY to move higher we need to see a break and close above this level.

On the EURJPY weekly chart, price broke out strongly two weeks ago above the trendline and came back down to re-test it last week. It is likely to move up from here. If price close below the trendline then it could create further downtrend.

On the USDJPY weekly chart, price was moving in a narrowing triangle, which was broken this morning after price gapped down lower. However this break could only be confirmed if price stay below the trendline. If price move back up inside the triangle then it could move all the way to the upper trendline.

Yen Fundamental Analysis

The gain in Yen strength last week was mainly due to the anticipation that Yen will grow stronger as it did back in 1990′s when similar quake hit Kobe. After that quake Yen rose 20% in next three months helped by economic activity due to reconstruction work. However this time the fundamentals are different, Japan’s debt is at 200 times of GDP and funds allocated towards rebuilding may not be as high as before.

Yen is already quite strong in comparison to US dollar and any further strength could lead to intervention from BoJ as they would prefer a weaker Yen to help exports. Look out for announcementsĀ earlier in the week in regards to budget and relief allocation funds.

For those who don’t know, all members in Live Trading Room now have access to live market news via our partner TradeTheNews.com

Yen Trading Plan

EURJPY is likely to bounce up after the re-test of trendline, look for longs until resistance at 115.50. If price close above this level then it could go all the way to 119.50. If it close below the trendline then it could start a new downtrend towards 108.00

USDJPY near term resistance is at 83.00, which is a decisive point. If price manages to break above then it could go all the way to 84.20. In case of bearish movement, the closest support is at 80.20

What’s your take on EURJPY this week?

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3 Responses to “Yen Outlook For The Week – Must Read”

  1. Cornelius 16 March 2011 at 9:43 am #

    hello there, awesome weblog, and a good understand! definitely one for my favorites.

  2. Mike Torres 21 March 2011 at 9:40 pm #

    Just curious, do you use stops when trading the JPY pairs?

    • FirePips 21 March 2011 at 10:17 pm #

      Yes, all our trades have Stop Loss. We never trade without one.


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