When looking at the charts there is apparently no threat to the global prosperity right now. Everything is doing great, shares are still cheap, Korea is not messing around and the global debt is not a problem. Rising interest rates in US are not a problem too. That must be the logic behind the recent upswing on the risky assets like EM currencies and the decline in save heaven assets like precious metals or yen. And about yen we will be talking about today.
We all know that stocks and USD/JPY have a high correlation. Recently on both we had a bearish correction. On the USD/JPY it was a bit deeper than on stocks and also it looks like on stocks it has already ended. The correction on the USD/JPY is still present as the price is locked inside of the flag (blue lines) even despite the fact that we recently had the 400 pips upswing.
Luckily for the buyers it all looks promising and we are on the good way to break the upper line of the flag and start a new legitimate bullish wave. From the technical point of view, what is needed here is a breakout of the upper line of the flag. We already made few steps towards that as we broke the horizontal resistances on the 110.2 and the 111.8 (green areas). Now those levels will be our closest supports and as long as we stay above them, the mid-term sentiment stays positive.
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