An unprecedented abnormal increase and speed (from Takahiro Kabutaki's "Market Cycles and Pattern Analysis")

(from Akira Kamikurugi's "Market Cycles and Pattern Analysis")

The USD/JPY rate rose to 109.75, and today it fell to around 108.55. As expected, such a sharp rise in a short period has spread a sense of being wary of overbought.

There is indecision about whether the pullback is shallow or deep. Looking at the mini-wave (up) during the previous five-year cycle’s advancing phase, as shown on the weekly chart, there were three occurrences, each roughly 8–9 yen in width.

This time, the rise is from the Trump shock’s low of 101.19 to 8.56 yen.

One target value has been reached. The initial target around 110 yen is close to the 38% level of the decline from last June’s five-year cycle top to this June’s low of 99 yen, which is 109.22.

There may still be higher prices in the 110 yen range, but perhaps one would want to take partial profits on long positions.

This is because the past three corrections have involved relatively substantial price changes: 1) after the initial rise, almost a full retracement; 2) a half retracement; 3) a 54% retracement. All have involved deeper pullbacks.

The 50% retracement of the current rise (as of yesterday’s high) is 105.46, and the 38% retracement is 106.47.

The question is whether there will be another high into the 110 yen range before a correction, or if we are already in a correction—the issue being whether a new top will form and if a plunge should be anticipated.

When looking at past upswings on a time axis, waves 1)–3) have required at least six weeks and up to ten weeks. This time, it has taken only five days thus far.

An astonishing speed.

In the past, a five-day ascent occurred during the Bank of Japan Governor Kuroda’s second extraordinary easing on October 31, 2014, moving from 109 yen to 115.50 in five days, a 6.5 yen rise. Even then, it did not reach the magnitude of this rise.

This demonstrates how extraordinary the rebound after the Trump shock was.

Again, it may be prudent to take partial profits here and, if a next 38–50% retracement occurs, to buy again.

What is different this time from past cases is that the subcycle began on November 9, so it is not yet time for a top. At least if a correction occurs, it will be the initial pullback within the new subcycle. I will be ready to buy in on a sharp decline.