Looking For a Tradeable Bounce in the Currency Wars

• Posted by Greg Harmon
• on February 12th, 2013

The Japanese Yen had a monster run against the US Dollar off of the 2007 bottom. Peaking late last year the government has since been on a path of devaluing the currency, joining the US and the Euro-zone in a race to the bottom. The Japanese have been winning this race over the last 4 months with the Yen falling over 20% against the US Dollar. The weekly chart of the ETF tracking the Yen, $FXY, shows the steep pullback but gives some hope for a tradeable bounce as well. First

it has retraced 50% of the major move higher. If it is to find support this is a likely place for it to happen. Second, if you look a the Relative Strength Index (RSI) it is at an extremely oversold level. Prior to this run lower it had never seen a level under 25. If we focus in on the daily chart you can see a divergence has already come in with the RSI turning higher as the price continued lower over

the last 6 weeks. The Yen may be ready to turn back higher with the current consolidation. What does this mean? It is not time to go out and buy the Yen yet but it is time to get ready and definitely time to take off some shorts if you have been playing that side (Yes that was for you Dennis Gartman).

Join the Dragonfly Capital Views Premium Membership

Sign up here to get deeper analysis and nearly 50 trade ideas every week.

Dragonfly Capital Views Performance Through January 2013 Expiry

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus