USDJPY Exerts its Influence
With a potential Head & Shoulders top in place on the Weekly USDJPY chart, and a shift lower on the daily chart, this pair is showing its influence. The other majors and former carry pairs turned south in sympathy with USDJPY yesterday reminding us that a strong Yen is definitely something the majors and stock indices fear. USDJPY continues to be a leading indicator for so many financial markets which has been lending traders who rely on coordination between markets an edge. While it was USDJPY which turned lower in mid-2007 and preceeded the turn lower for the global economy, a weak USDJPY doesn’t mean we see financial markets give back the previous 3 months hard fought gains. But it could mean, as we’ve seen over the last two sessions that when USDJPY sinks and the Yen strengthens we see counter-trend corrections across the board. We also know that every trend starts out as a counter-trend.
Along with this set-up on the Weekly USDJPY chart, another ominous sign for the global financial markets is gold’s price action. The trend is up on the daily chart and supported by a buy signal on the Weekly chart last Friday.
Another leg up in gold from this point could spell a break-out above $1,000.
Jay Norris
www.trading-u.com
