The Curious Case Of a Weak Japanese Yen.

It has been a few busy weeks for me and I have completely forgotten to update the blog. Today I found some spare time and I thought I would present my thoughts on some Japanese currency pairs. In my trading experience I have noticed that the correlation between EUR/JPY and GBP/JPY is very strong and when either pair presents a situation that is confirmed by the other pair it is wise to listen to the market. I was looking over the chart this weekend and I noticed that the EUR/JPY is forming a divergence setup when viewed on the monthly time frame. If you observe bellow on the chart I have marked a massive triple divergence that is showing on the Relative Strength Index. What is also very interesting to note is that the EUR/JPY has formed a big bullish rejection bar and the low of the bar could not be situated more perfectly. The low of the bar is sitting squarely on a support/resistance price pivot that goes back all the way to 2001. This in my opinion is a momentous occasion. This price pivot has not been visited in ten years and the reaction that is produced on the very first touch tells me that zone will be defended. There is a massive confluence of factors at play on this pair, we have triple divergence formed, a very bullish looking monthly candle and a historic price pivot @ 101.00 that has not been re-visited since 2001. Now the monthly chart are a great indicator of long term bias but it would be splendid if there was something that would give us a better clue on a lower time frame. On the second chart bellow I have marked a very nice "pin" candle that is sitting on a solid support area. The 105.00 pivot was very heavily defended in October and is now being used as support. This pair has started making higher highs already and it looks like for the medium term the bias may have shifted to long.

Having blabbered about the EUR/JPY for so long, let me shift the focus to the GBP/JPY now. If we look at the chart bellow for this pair there is a very similar situation. On the daily chart there are two "pin" candles that have formed, almost the same rejection bars as we see in the EUR/JPY. Also there is added support level @ 123.50 which was used back in August. Both Forex pairs have started making high highs already and there are many supporting factors between both pairs that are showing that at least in the medium term the monster downtrend that has been dominating the Japanese Yen might be at an end!