CotW 3/29/15: Yen Nears Cyclical Low

yen cyclical low

This feature is usually focused on short-term situations. However, a compelling situation is now developing in the Japanese currency.

The chart above shows our cyclical long-term chart in the Japanese yen versus US dollar futures. The cycles and prices are shown at the top of the chart, while the bottom of the chart shows the Commitments of Traders data. Specifically, the metric shown at the bottom of the chart is commercial buying and selling activity in Japanese yen futures.Above the zero line (in green), commercial interests such as banks, corporations, financial institutions of various types and hedge funds are buying yen futures in anticipation of a long-term low.

While the chart shows the low may take another year to develop, frequently, stocks act in anticipation of these lows. We are beginning to see signs of such behavior in many Japanese stocks, the most well known of which is Sony. We will give specific recommendations to take advantage of this developing situation.

Finally, remember that commercials act well in advance of lows as they accumulate positions on a scale down. This is a long-term forecast, and should not be used for short-term trading.