Those who watch me on Tastytrade may recall the channels I’ve pointed out on the Euro. Well, the channel is now broken (for obvious reasons). My view is that this failure will result in the same thing that the prior failure did: a new, lower channel that will be in place for a long while.
It wasn’t that long ago that the USD/JPY (that is, the US dollar and Japanese Yen exchange rate) had pretty much a 1.0 correlation with our own equity markets. If it was up half a percent, the S&P would be up half a percent. If it was unchanged, we were unchanged. You get the idea.
Lately, though, our own equities continue to defy every logical reason to go lower. Below is a graph of the USD/JPY. If I had shown you this chart a year ago and asked you to guess what equities had been doing, you’d probably correctly assume the Dow was down about 1500 points over the past month.
If nothing else, it’s heartening to see what happens with a central banker loses absolutely all credibility, because, I assure you, the chap in the picture above wanted exactly the opposite to happen with this chart, and he can’t seem to reverse its course.
In advance of Britain’s “Brexit” or “Bremain” vote on Thursday, June 23, the British Pound has gained momentum as of last week, and Sunday evening as I write this post.
The current price of the GBP/USD Forex pair is 1.4581, as shown on the Monthly chart below. It will need to break and stay above that level and, potentially retest 1.50, which represents the next long-term resistance level.
A break and hold below the 30-year major support level of 1.40 could have catastrophic repercussions, not only for Britain’s FTSE 100 Index, but also other major world indices. Price retested this long-term critical support level last week and is rallying.
Unless you’ve been sleeping under a rock (actually, more like a very large column of rocks), you know that the big “Brexit” vote is this Thursday, and we’ll have results here in the U.S. late on Thursday or in the very early Friday hours.
I have one very simple, whiny reason why I’m sure it’s going to fail: because nothing cool every happens anymore. Not ever.
Remember all the stink that ZeroHedge made about the “Grexit”? Frankly, I don’t even remember how that turned out, although I vaguely remember that Greece, did, in fact, vote to ditch Europe, but within days it didn’t make any difference. Suffice it to say, the entire Greek hoo-ha was a tempest in a teapot, and that’s probably overstating it.
I don’t really trade FOREX, but I watch those charts closely. I find it interesting how cleanly the Euro has been trading. Below I’ve put the symbol FXE (which is the ETF for the Euro), and as you can plainly see, there are two sets of parallel ascending channels that have been bounding the price action. It’ll be interesting to see how the Brexit (should the vote actually transpire) will affect this, although it would seem things are tilted more bullish than bearish.
I guess my prediction that DXJ would fall (made on April 20th) had some merit to it; thanks, Head and Shoulders! I confess, I am envious of a market that can GO down and STAY down (as I glance over at the SPY, which is down fifteen hundredths of a single percentage point as I’m typing this).