Autochartist Forecast

The USD/JPY is currently in a downtrend across the 15, 30, 60, and 240 minute time frames.  This further explains the current risk aversion in the market.  Equities aren’t weak but a stall is evident in the uptrend as the Dow consolidates between the 9,200 to 9,600 levels.

The USD/JPY is a powerful barometer for risk aversion, as well as risk appetite of the markets.  Also the U.S. Dollar, as the current market psychology is to sell Dollars when greedy and buy them back when fearful.  When traders and investors dump Dollars they are usually buying Euros and Equities.  Being aware of this relationship makes for a better understanding of what moves forex pairs.

The USD/JPY is currently in a nice mark down cycle on the 15 minute chart.  This provides a good look at the pre-market Dow and S&P markets.  The question is what could possibly happen to the U.S. Dollar once the bell rings on Wall Street?  Remember that understanding the forces that move the Dollar has an effect on all the majors.  This analysis is meant to allow traders to gauge whether there is more of an appetite for risk or aversion.

The Continuation Channel Down Emerging Pattern alert is suggesting the possibility of a further downside.  However, like all trending chart patterns, there is always a chance of reversal.  With prices trading so close to the downtrend resistance line (Y) there could be a pierce and a buy trigger.  This would be a reversal if prices can trade through 93.70.  The Initial Trend is low enough (Z) to suggest it slowing.  This should be a clue to a market cycle transition i.e. a reversal.

If prices stay within the chart pattern remember that even with the low Initial Trend, the downtrend resistance line (Y) is a trend-following set up.  A short entry could so be taken.  A reversal entry is often the result of a failed swing set up, and in that case it means prices would not stay within the resistance of the channel.  Also keep an eye on the downtrend support line (X) as this is a potential breakdown level.  There will also be support for prices as they draw near the 93.20 to 93.00 psychological levels.

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