The following are the reasons for being a BEAR on JPY.
1.1 There is a significant number of people selling the Yen than those that are buying.
1.2 There is also a huge possibility (90% + chance) of the FED raising rates this coming week as well which will probably weaken the Yen further.
1.3 The Nikkei has been very bullish since July.
1.4 The 21 is still above the 55 EMA indicating bullishness in almost all the JPY major currency pairs.
This week begins with a serious teasing and possible testing of power between Japan and China in terms of military aircrafts which happened over on Saturday. This is happening in the face of a possible failure of the Japan-China Ministerial meeting which has been on the cards for a while since the beginning of the year. This is a meeting which is supposed to involve both these countries’ Ministers of Finance, foreign Affair and other important ministers. As I did indicate in my weekly review dated 07-11 Nov. 2016. This poses a serious contestation issue between these two (2) countries including Taiwan as well as the influence of American politics and their foreign interest (future foreign policy) within these international relations under new Trump administration. This can and will affect the Yen either way. For more reading please click here and here
It looks like there is going to be fireworks on the Yen pairs this week, where both the Nikkei and all these pairs open with gaps again this week. It’s only NZD/JPY which has opened with a small gap 1 pip.
3. ECONOMIC INDICATORS
There seems to be no high impact news for the JPY specifically this coming week.
12/12/16: Core manufacturing orders (m/m), PPI (y/y)and the tertiary industry activity (m/m) are all expected to be up this week. We also need to look out for the Preliminary machine tool orders.
14/12/16: Tankan Manufacturing Index and Tankan Non-manufacturing Index are both expected to go up. Revised Industrial production (m/m) data is also expected. Even though this in another country but the announcement on FED Funds rate on Wednesday is a high impact news. This is what traders and investors around the world will be looking out for this coming week.
15/12/16: Flash manufacturing PMI is expected to go up.
4. COT REPORT ON JPY
The report shows a serious increase in short positions for the past five (5) weeks, meaning that more people are selling the Yen. It is almost flat for the past three (3) weeks after declining meaning that less and less people are buying the Yen. The net positions are below the water line indicating Yen bearishness. The weekly close price for the JPY was at its 9 months highest since March 2016.
5. TECHNICAL SUMMARY
I am expecting NIKKEI to continue being bullish this week with a possible continuation of Yen weakness except in two (2) pairs which will be pointed out below. This does not ignore the issue of possible pullbacks during the week. NIKKEI opened at 19 198.88 and might possibly cruise through 19 800.00 psyche level.
USD/JPY opened at 115.410 this week. Even though 55EMA was touched last week I don’t see any double top being formed as it starting to make HH’s. I also expect down and upward movements this week because of the FED funds rate announcement and the 117.000 psyche level being broken.
GBP/JPY opened at 145.110 this week. The expectation is to cut through 147.000 and test the 148.000 psyche level.
EUR/JPY opened at 121.560. This is one of the pairs which raises concern about a possible double top because of the 55EMA on the H4 chart. There seems to be a LH forming as well. This might signal exhaustion.
CAD/JPY opened at 87.790 and was the Yen pair which had the biggest percentage last week. Whilst monitoring the oil news as well as the recent opec deal, this pair is also expected to cut through 89.000 and test the 90.000 psyche level this week.
NZD/JPY opened at 82.240 with a 1 pip gap. With the NZD strength because of milk prices, this pair is also expected sail over the 84.000 psyche level this week.
AUD/JPY opened at 85.900. Whilst monitoring the Gold price and news, this pair is also expected to cut through the 87.000 psyche level this week.
CHF/JPY opened at 113.190. This is another pair which raises concern about a possible double top as well because of the 55EMA on the H4 chart the weekly target was not reached last week.
Hopefully the charts are uploaded.