JPY: Long term
May 08, 2011 4:45 PM ET
ker.nulov's Blog
49 Followers
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.
Summary: A big devaluation will come on the japanese yen.
Orignally I have estimated that it will start from 1.30
However, despite that the target has been completed, I am extending the beginning of the trend to 6 months more. The reason is that until prices of commodities and stocks go lower, we aren't going to see substantial yen devaluation. High prices do not encourage the borrowing of the yen, and thus the creation of more currency. But when prices are low as it might happen with the next leg of "Depression II" I am calling, free money like the yen will be in high demand, this will cause creation of immense amount of money and consequently a huge devaluation of the currency. BOJ might need to rise interest rates.
The technicals are very good to get short:
Besides double top, we have a good Elliot Wave pattern. The third wave shows a more impulsive and strong trading. The fifth wave is slow, volatile and losing momentum, all signs of long term top. I think a good short would be at 1.28 on the YEN Index, even if the market will go higher to around 1.30 or 1.31, though it shouldn't.
The downside potential is calculated as 50% , with bottom to around 0.50 on the index. The trend should last from 1 to 3 years.
This is the monthly chart with the updated uptrend channel:
I think the first wave already took place, now we only need to wait for the correction to complete, and we will get an awesome downtrend.
Orignally I have estimated that it will start from 1.30
However, despite that the target has been completed, I am extending the beginning of the trend to 6 months more. The reason is that until prices of commodities and stocks go lower, we aren't going to see substantial yen devaluation. High prices do not encourage the borrowing of the yen, and thus the creation of more currency. But when prices are low as it might happen with the next leg of "Depression II" I am calling, free money like the yen will be in high demand, this will cause creation of immense amount of money and consequently a huge devaluation of the currency. BOJ might need to rise interest rates.
The technicals are very good to get short:
Besides double top, we have a good Elliot Wave pattern. The third wave shows a more impulsive and strong trading. The fifth wave is slow, volatile and losing momentum, all signs of long term top. I think a good short would be at 1.28 on the YEN Index, even if the market will go higher to around 1.30 or 1.31, though it shouldn't.
The downside potential is calculated as 50% , with bottom to around 0.50 on the index. The trend should last from 1 to 3 years.
This is the monthly chart with the updated uptrend channel:
I think the first wave already took place, now we only need to wait for the correction to complete, and we will get an awesome downtrend.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.