Following up on the teaser I left on my last post, here is a little bit of catch-up on the Japanese markets since rather important technical levels are coming into play.
First of all though, if you’re reading this due to me applying for a job at your firm (and doing the first stage presentation yesterday), thank you very much for following up by visiting my blog after me sending my materials. It is much appreciated! If you’re simply here because you’ve gotten lost on the internet or someone told you that I write about anything of value, I’m sorry. It won’t take you long to realize that you’ll have more important things to do than reading about some finance ramblings!
Yesterday was all about the reversal of the dollar strength that had offered a lot of risk-on opportunities in the last few days, as it lowered all other currencies and lowered commodity prices, thus because of the higher volatility in commodities there was a net gap for exporters and importers alike to enjoy. This week has started to fray those connections, and reversal trading (particularly in oil) got traders a little bit scared and set the New York Stock Exchange opening up for a very, very volatile first few hours.
Here’s a slightly more updated chart (things are moving fast at the moment) of my teaser index in question.
Price has since gone even further north, last check was around 17 460.
Before we go into the rather obvious technicals, I would recommend having a closer look at the currency context in which this has happened:
Two days ago we had a test of the 61.8% Fibonacci level, which directly led to crossing the trend channel (looks familiar?) and testing the 50% Fibonacci level, 3.7 yen (3.04%) lower from the US$’s perspective. 3% on a currency in two days! That is impressive! The euro has been much more tame (slightly more than 1% gain) and the Australian dollar roughly in between, but these movements have been very, very telling of the general direction today of US$ weakness and this leading to general risk aversion and profit taking on positions aligned in that way. This of course is applicable to both the yen and Japanese stock indices as well. However, it sets Japan up for a particularly interesting technical crossroads. Read on past the jump for a brief summary, what I think will tip the scales either way, and where the other milestones on this random walk are.