Your Road Map For This Yen Rally

From the desk of Thomas Bruni @BruniCharting


With the Yen rallying nearly 10% from intraday low to high in as many days, this breakout is not one to be ignored. Since the Yen has  a strong negative correlation with US equities, this inter-market relationship is an important one to keep track of regardless of whether you trade currencies or not.

Structurally the Yen has been trading in a seven point range at and below the 2006-2007 lows for the last 15 months. Late last year prices confirmed a failed breakdown by breaking back above the 2005 & 2007 lows, as well as the downtrend line from the 2012 highs.

Over the past two weeks prices have accelerated to the upside, providing additional confirmation that this market is headed higher. As long as prices can hold above support outlined in gray (.0082), then the weight of evidence suggests the first upside target is near the 161.8% extension of the late 2014-2016 range and prior support near .0098-.0099.

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U.S. Stocks Are Ready To Play Catch-Up

From the desk of Thomas Bruni @BruniCharting


A few weeks ago global equity markets began to mean revert to the upside after many met downside targets and momentum positively diverged. For examples of this check out my posts from then here and here. The same failed breakdowns and bullish momentum divergences that sparked a rally globally are now present across many of the US sectors and indices.

Of the 41 US indices / sectors I follow, 28 of them have bullish momentum divergences on the daily charts and have either confirmed, or are working on confirming, a failed breakdown by trading back above a prior low.

A chart of the S&P 500 cash index is a good example of the conditions I’m referring to. Last week prices made new marginal lows and quickly reversed while momentum put in a higher low. If prices can close above the August lows, it would confirm the failed breakdown and bullish momentum divergence. Structurally this remains a bear market, but with prices 9% below the 200 day moving average the weight of evidence suggests that a counter-trend rally could develop from here.

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