JPY is....ENGULFed!!!

It is quite a hectic week this week. Not because of volatility in market movement, but there is a public holiday in the middle of the week, running errant for my wife the day after, and my daughter's graduation ceremony. 

She has completed her 3 years of study in Singapore Polytechnic, the same one I went after my GCE "A" Level failure. It was the turning point for me, climbing back up after a major failure. My daughter also shared my experience, it was her lowest point when she did badly in her GCE "O" Level. 

It is through Singapore Polytechnic and its diploma courses that helped us finding our path. I went forth to obtain a degree from the University of Bradford then while my daughter is now accepted by the National University of Singapore, a prestige institution in Singapore. 

I have been telling my children that " it is not about falling down, but getting back up", which is why I allow my children to fail. 

My son with a lack seriousness dealing with his PSLE, he failed to enter the school of his choice. This failure led him to treat study seriously and he redeemed his honor through his GCE "O" Level result. Although he still tends to slack off, every failure to him triggers loud alarm in him with a sense trigger warning, and this helps to guide him back on track.

My daughter on the other hand hid her incompetence due to embarrassment in admitting her weakness. As a result, she did not seek help from me until it is too late, her failure led more conversation between us. Even though she is still stubborn, she is willing to share her situation with me.

Same thing with trading, it involves a lot of failures before I can succeed. The most important thing is to ensure I get back up. This involves dropping my own arrogance and reflect on my own action.

Enough of my chit chat. What shall I look into today?

I have early mentioned about the Nikkei reversal, I did not check on JPY. The last time I did a piece on JPY was Nikkei & JPY divergence dated 25th June 2023. It was due to my curiosity on the divergence between JPY and Nikkei at the time. Even so, I only estimated resistance between 145 to 149. It hit a high of 159.881 this week. 

Is the depreciation of the Yen with no end? Considering that I foresee the weakening of the Nikkei, surely JPY should align with the direction of Nikkei by now.

Fig 1. JPY weekly chart

While I estimated in my earlier update that JPY continued to weaken, breaking my resistances of 145 and 149 respectively. It even cut through the previous high of 151.937, reaching a new high of 159.961. This coincides with the 61.8$% projection of both a major and minor move (blue lines), resisting its advance.

At the same time, there are signs of weakness, with divergences observed on MACD on every new high on Nikkei. 

What's more? 

A long downward bar formed by the end of this week after reaching a new high, only to stop by the 8-week moving average, resulting in an engulf formation. this is a reversal pattern but requires confirmation from the next bar.

These are signs of JPY reversing, meaning that it will get stronger than USD at least in the coming weeks.

So where do I see the support?

Using projection, it can be observed support zone of between 134.9388 to144.5568, which also coincide with its 144-week moving average of 135.9637 and 145.8182.

JPY will be quite interesting in the coming weeks, especially when JPY continue diverge with Nikkei