Dollar/Yen, the defense around 100 is within expectations! If it can hold support, another uptrend wave will come again
When the UK left the EU, the dollar/yen fell below 100 yen, but it rebounded to the 107 yen range and is now being pushed back again, perhaps approaching the historic 100 yen milestone. At this stage, the price has fallen below the daily Ichimoku line, indicating a shift with the upside remaining weak and the downside solid; if it were to break through the cloud from below, there is a possibility of a rally up toward around the 200-day line.
The market next week will start with Tokyo closed, and on the 22nd Tokyo will be closed again. This week, the U.S. and Japan policy interest rates will be announced, and the market is expected to move rapidly, so I would pay attention to the closing levels of the dollar/yen and the Nikkei stock average at the end of this week.
In the FOMC, further rate hikes this month have been deferred, and there are rumors of a surprise from the Bank of Japan. However, the BoJ policy meeting is announced first, and here it remains to be seen whether proactive action will be taken. The focus is likely to be on whether Tokyo markets will reopen on Friday after the events have passed, so I would like to keep an eye on the yen market in the Tokyo market through to the end of the month after the U.S.-Japan events have passed.
The 100 yen defense/offense scenario had already been priced in
From a blog article on 2015/01/11
First, I would like to look at the dollar/yen. I showed daily and monthly charts; on the daily chart, the price failed to break above the high 121 yen range as anticipated by year-end strategy, aiming for the upper band of the Ichimoku cloud. What to watch from here is that the lagging span has fallen below the real-body candles, and if next week it dives into the cloud, there is a possibility it will test 115.56 at year-end. If that happens, the lagging span could break through all resistance lines (conversion line, 21-day line, base line) at once. If it continues to fall to the lower edge of the cloud, the article written at year-end becomes clear. A decline to the 113–112 yen range seems reasonable, but below that there is the 110 yen point from the Kuroda Bazooka 2, and if momentum builds, a temporary move below 110 yen should be anticipated. On the other hand, looking at the monthly chart, year-end shows long wicks on both ends, a candlestick that often appears at market reversals. Since around October there has been a rapid rise, the rebound could be large. The dollar/yen reached a high around 124 yen in 2007, and this year marks the eighth year; the dollar/yen tends to set a high every eight years and then move downward; if this rule holds, the year-end slump may occur, but even if it does, the peak would likely be near 124 yen. If it were not for the Kuroda Bazooka 2, last year would have likely ended at around 110 yen. In short, if we consider this year's gains as having been achieved by the end of last year, a deep correction is inevitable sooner or later.
The scenario forecast for 2015 remains within expectations at this stage, and from here there was a strong rebound from historically low levels
It is worth watching whether the 61.8% retracement at around 95 yen will become the maximum pullback.
Therefore, attention should be paid to the lower edge of the Ichimoku cloud on the dollar/yen monthly chart going forward.
If the government and the BoJ coordinate effectively to continue the easing policy, there are many points where the current dollar/yen level could technically hold, and if we can seize a timing for a reversal, we could again target the high 125 yen range.
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