"USD/JPY: What will the week starting March 6 be like?" Mr. Naoto Sakatani

Release date: 2017/03/05 12:04

Points: Fundamentally,
short-covering continues for a while
Technically,
a rebound toward the 115 level and awareness of the year-to-date high of 118.60.

CME Currency Futures Position Status: as of February 28
(February 28) (February 21) (February 14)
Yen ▲50017▲50162 ▲51284
Euro ▲51164▲58251 ▲46764
Pound ▲70671▲66352▲65528

Chicago IMM: by short-term speculators and investors
Net short yen positions have decreased slightly,
from the peak of 87,000 contracts by about 42.5%.

Chicago VIX Index: an index indicating the level of investor fear,
the VIX at 11.50 (-0.21) closed lower.


Last week, above all, the strong pre-event attention was on,
Trump’s address to both houses in joint session on the 28th,
and the market has various evaluations,
but what I think is that I was utterly disappointed.
He had previously set the bar very high with a notion of an “astonishing tax-cut policy proposal,”

and yet that speech was not what should have been.


Even more surprising was,
in response to President Trump’s congressional address,
the fact that the market did not collapse.

That means,
since the beginning of last week, by the Fed officials
persistent reiteration of a March rate hike,
this shows how significant its meaning is.

The market did not collapse on expected bad news,
and although it briefly tested the lows, it ultimately held the 114s for the week.

This implies that the market and investors
have not fully covered their short positions up to now,
and I hear that some participants are adding to their shorts.

Moreover, turning to longs
has not been able to be executed.

That means there is still
likely another upward push to occur.

The market is at a very important point now,
and the direction is that an uptrend has resumed,
with emphasis on the central value of 110.70,
and moves aimed at the year-to-date high have begun,
so it is important to ride it firmly.


Last week's range showed a search for the weekly low at the start,
and from midweek, a move to test higher prices began.
Both the lower and upper bounds are clearly rising,
and this week should continue the upward trend.
February 27: 111.91 – 112.83
February 28: 111.68 – 112.89
March 1: 112.73 – 114.04
March 2: 113.67 – 114.59
March 3: 113.80 – 114.74

Technically, on the daily Ichimoku chart
Leading Span 1 is at 114.82 and flat
Actual price at the close on the 3rd is 114.05
Baseline is at 113.49 and flat
Leading Span 2 is at 113.22 and rising
Conversion line is at 113.13 and rising
Thus.

Technically, it is at a very important position.
Maintaining the central value of 110.70 and breaking upward.

Starting from last November’s low of 101.18,
the uptrend,
and if we consider the December high of 118.67 as the top,
the half retracement is at the 110.00 level.
That uptrend paused around that level,
and then rose again.
After pausing at the 110.00 level,
the latter part of the rise to the December high of 118.67
the starting point of the uptrend is seen as 110.50 on November 25,

with that 110.50 level being not only the point of last year's rise,
but also a key level in this year's early decline consolidation.


Therefore, in the movement this week,
how the 110.50 is treated will determine
the market direction toward the end of March,
as I stated last week.
And it has maintained that level and moved higher.

Upside targets are,
the daily Ichimoku conversion line and baseline
have clearly broken above.
First, the previous day’s high of 114.75,
and Leading Span 1 at 114.82,
after breaking above these,
the highs of January 30 and February 15,
114.95 and 115.00 respectively.
Whether the price can break above the 114.95–115.00 zone is the key point.

Above that are the January 19 high of 115.60 and the January 11 high of 116.87.

If these are cleared,
the year-to-date high of 118.60 comes into view.

Downside targets are,
the daily Ichimoku conversion line and baseline,
and the rising Leading Span 2,
if broken below
the seven-day low of 111.57,
the 111.50–111.57 price area is an important support level.


Estimated range is 113.50–117.50.