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The Dollar vs the Yen

7-30-16 I posted a fantasy forex swing trade….Long the USD/JPY.

Here was the chart on that date, with buy point and targets.

usd-jpy-range-trade

Here’s how that chart looks on 11-23-16.

usdjpy11-23-16

Then it’s rocketed through 3 targets, and right to 50% of the extended target.

In fact, this entire move happened in two weeks, Nov 9-23.  The trade was 3 ½ months of waiting, and sudden payoff.

Trump

This is of course largely based on the Trump idea that the market is expressing, that Trump will cause a strong economy, which will lead to a series of Fed rate raises.

Clearly, this trade worked.  It’s hit the first 3 scale outs.  The first scale would have allowed for a reload…potentially twice.

The dollar

The dollar, meanwhile, is well positioned for a fall.  It has exceeded the 2015 absolute price high.  So now we have excess.  And it has come to a perfect touch of the 61.8 % fib, of the giant down move from 2000-2008.

11-23-16-bounce-off-61-8

Clearly the market respected that level.  The first touch was probably too light and tentative.  It will probably give it another try or two.  Maybe get a bit over 102.

11-23-16-61-8-touch

If this is going to be a pivot, it’s a major landmark, as the highest high in 14 years, and testing a level 16 years in the making.

So price will likely not reject instantly.  But it would be surprising if the dollar does not pull back here, even if it does end up higher someday.

But a break and decisive hold above the level would signal a whole new era in currencies.  It would break the giant down move, and set the dollar in to a range trading mode, with no clear tops or bottoms for many years to come.

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