Oct 14, 2022
VOT Research Desk
USD-pairs have experienced a lot of volatility as a result of another hot US inflation data.
While the DXY Index appears to be syphoning into a symmetrical triangle, USD/JPY rates have moved lower after briefly hurdling its 1998 high.
Rates for the USD/JPY have a bullish tendency in the near term.
CONVERSION POST-CPI
The US dollar initially gained strength as a result of the September CPI report, as the likelihood of a rate hike by the Fed at its FOMC meetings in November and December increased. Cross-asset flows, however, drove down the dollar and erased its post-CPI gains despite what appears to be a significant short covering rebound in US equity markets.
Curiously, US Treasury rates have remained high throughout the session, supporting the notion that a substantial sea change hasn’t yet occurred. In result, the USD/JPY rates and the broader DXY Index’s weakening may only be temporary.
The DXY Index may be setting a short-term top as a result of a bearish key reversal that is perhaps developing on the daily timeframe. This could indicate that the DXY Index is funnelling into a symmetrical triangle in light of recent price movement, which given the uptrend that has before it, would ultimately signal a continuous effort higher.
Over the upcoming sessions, triangle support will be closer to 111.25, and there may be a small break of the daily 21-EMA (one-month moving average), as there was during the first week of October. A breakout above today’s high, or 113.92, would signal the start of a bullish breakout.
After the September US inflation report, USD/JPY rates briefly rose to their highest level since August 1990, having hit the 100% Fibonacci retracement of the 1998 high/2011 low range. Although most of the gains have been lost, the session’s USD/JPY rates are still in the green. As a result, the technical structure is still positive.
The daily EMA envelope for the USD/JPY rate is above it and is still in a bullish sequential order. Daily Slow Stochastics are maintaining in overbought territory, while daily MACD is rising once more while above its signal line.
Japanese Ministry of Finance has previously intervened to strengthen the Japanese Yen. The policy divergence between the Federal Reserve and the Bank of Japan will continue to exist, however, making a major decline in USD/JPY rates difficult.
USD/JPY: Data from retail traders reveal that 18.05% of traders are net-long, with a short-to-long ratio of 4.54 to 1. The number of traders who are net-long is down 26.15% from yesterday and down 10.38% from the previous week, while the number of traders who are net-short is down 1.72% from yesterday and up 5.43% from the previous week.
We frequently adopt a contrarian stance to the general consensus, and the fact that traders are net short the USD/JPY signals that prices may rise further.
Due to the fact that traders are more net-short today than they were yesterday and last week, as well as the most recent developments, we have a greater USD/JPY bullish contrarian trading bias.
Pivot Points
|
Name |
S3 |
S2 |
S1 |
Pivot Points |
R1 |
R2 |
R3 |
|
Classic |
145.39 |
145.95 |
146.58 |
147.13 |
147.76 |
148.31 |
148.94 |
|
Fibonacci |
145.95 |
146.40 |
146.68 |
147.13 |
147.58 |
147.86 |
148.31 |
|
Camarilla |
146.89 |
147.00 |
147.11 |
147.13 |
147.33 |
147.44 |
147.55 |
|
Woodie’s |
145.45 |
145.98 |
146.64 |
147.16 |
147.82 |
148.34 |
149.00 |
|
DeMark’s |
– |
– |
146.86 |
147.27 |
148.05 |
– |
– |
Technical Indicators
|
Name |
Value |
Action |
|
RSI(14) |
73.820 |
Buy |
|
STOCH(9,6) |
68.841 |
Buy |
|
STOCHRSI(14) |
100.000 |
Overbought |
|
MACD(12,26) |
1.710 |
Buy |
|
ADX(14) |
54.165 |
Buy |
|
Williams %R |
-1.880 |
Overbought |
|
CCI(14) |
198.2836 |
Buy |
|
ATR(14) |
0.8932 |
Less Volatility |
|
Highs/Lows(14) |
2.0282 |
Buy |
|
Ultimate Oscillator |
74.214 |
Overbought |
|
ROC |
2.035 |
Buy |
|
Bull/Bear Power(13) |
3.4580 |
Buy |
