The Japanese yen has been on a wild ride until the beginning of this 2015, when it finally halted its 3-year bullish run at 125.81, past June monthly high. The pair has been always the most sensitive to US data, with the JPY being particularly vulnerable to US employment figures, and of course, Central Bank decisions. Given that the Japan latest GDP figures suggest the country is in recession, whilst inflation is far below 2.0%, investors are waiting for some further easing by the BOJ. The chances have, however, diminished as some lawmakers suggested the latest economic setback is temporal, and won't need action to get back in track.
Read: Central banks to continue trying to achieve 2% inflation in 2016
Anyway, and despite the pair maintains a long term bullish tone, some bearish divergences that are surging in the monthly chart suggest that fresh highs are not yet to be taken for granted. Indeed, with the FED triggering a lift off in December, and if the pair holds near the current 123.50 region, the pair can run up to the mentioned yearly high around 125.80, while if somehow the rally extends beyond this last, the next probable bullish target comes at 127.60, April 2002 monthly low. Seems unlikely the JPY will continue weakening into March next year, when some yen strength could be expected by the end of the fiscal year. Nevertheless and after that, the next logical target on dollar strength comes at the 130.00 psychological figure.
_20151119152802.png "USDJPY weekly")
The mounting bearish divergences are far from being confirmed, but if the pair breaks below 119.30, the main support for the upcoming months, it can retest the low posted last August at 116.60. Further falls however are unlikely, and in fact, given that the dollar should lead the way during 2016, any decline towards the level should be consider a long term buying opportunity.
Read also other related articles about what 2016 could bring for the markets:
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EUR USD Forecast 2016
GBP USD Forecast 2016
Central Banks
ECB Forecast 2016
RBA Forecast 2016
PBoC Forecast 2016
FED Forecast 2016
BoE Forecast 2016
BoJ Forecast 2016
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Read: Central banks to continue trying to achieve 2% inflation in 2016
Anyway, and despite the pair maintains a long term bullish tone, some bearish divergences that are surging in the monthly chart suggest that fresh highs are not yet to be taken for granted. Indeed, with the FED triggering a lift off in December, and if the pair holds near the current 123.50 region, the pair can run up to the mentioned yearly high around 125.80, while if somehow the rally extends beyond this last, the next probable bullish target comes at 127.60, April 2002 monthly low. Seems unlikely the JPY will continue weakening into March next year, when some yen strength could be expected by the end of the fiscal year. Nevertheless and after that, the next logical target on dollar strength comes at the 130.00 psychological figure.
The mounting bearish divergences are far from being confirmed, but if the pair breaks below 119.30, the main support for the upcoming months, it can retest the low posted last August at 116.60. Further falls however are unlikely, and in fact, given that the dollar should lead the way during 2016, any decline towards the level should be consider a long term buying opportunity.
USDJPY Point & Figure Charts Forecast by Gonçalo Moreira, CMT
The bearish 45º line was broken by a bear trap pattern, in this case a bottom double sell signal, which has been reversed into a double-top and then triple-top buy signal. The whole affair let the new bullish objective line dictate the trend which is now bullish, valid until broken by a double or triple bottom.
The 3-box reversal chart enable for a vertical count which has been plotted on the chart. 131.00 is the next target for this currency pair, short of the 2002 highs.
Thereafter, trying to find scope for the legacy 1998 spike highs maintaining a 3-box granulation, I come up repeatedly with an 150.00+ count. The below chart depicts just one of these vertical calculations using a 150 pip box size. 153.00 Japanese yen per US dollar is the long-term target to have in mind for next year.
Note the successive internal lines (in thin green) defending the bullish stance of this market. The eventual break of the first of these lines would not change the trend direction, but rather alert of a correction towards the next one.
Read also other related articles about what 2016 could bring for the markets:
Currencies
EUR USD Forecast 2016
GBP USD Forecast 2016
Central Banks
ECB Forecast 2016
RBA Forecast 2016
PBoC Forecast 2016
FED Forecast 2016
BoE Forecast 2016
BoJ Forecast 2016
SNB Forecast 2016
Commodities
Gold Forecast 2016
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