Last spring, I offered up a number of posts analyzing the Japanese Yen currency breakdown. Using the Japanese Yen Trust (FXY) etf as my proxy, I pointed out the weakness and highlighted the trend change/breakdown. Since the breakdown, the Yen has fallen roughly 35 percent. Furthermore, as the Japanese Yen took the elevator down, the Nikkei 225 jumped on the elevator up.
And much of this volatility and excitement has to do with the advent of Abenomics. Also see: In Abe we trust?
Looking at the FXY through an intermediate-term lens, it looks as if the currency may want to retest its lows… and if not immediately, then some time over the next month or so. Waterfall lows often see a nice bounce that is followed by a retest/lower low at some point thereafter. Now, I am not an Elliott Wave enthusiast, but a similar setup may be unfolding in the form of a 5 wave structure. See chart below.
Japanese Yen Trust (FXY) Weekly Chart
Some additional Japanese Yen slippage may yield another mild rally in the Nikkei 225, but this could be short-lived… especially if the Yen finds a bottom. Either way, the range parameters are set – see the monthly chart below.
Nikkei 225 Monthly Chart
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.