NFTRH+; Yen-Hedged Japan (Look Ahead)

We’ve been noting a deterioration in the Yen’s technical status lately, which would help Japanese exports and its stock market in general.  Here is the daily view of the Yen, giving detail to the toppy looking weekly chart we usually view as part of the multi-currency chart.  A lower low to the late August low would just about seal the bearish deal.

japanese yen

Turning to the stock market, obviously EWJ would be out in a bearish Yen climate.  DXJ, the Yen-hedged ETF from Wisdomtree works well at hedging out the willful currency compromise courtesy of BoJ and retains the benefits of currency devaluation (unlike EWJ, which would see compromised performance due to currency drag, assuming the Yen drops).

Despite the weekly Nikkei still being below resistance (as noted in recent NFTRH reports) DXJ daily has made some positive moves, as also noted.  Here is the picture of what I mean.  It first held the daily SMA 50 and then broke above the SMA 200 last week.  It is also tentatively above a neckline.

dxj daily chart

Taking a weekly view, this looks a bit like the Asia (ex-Japan) fund AAXJ, which we NFTRH+’d a few months ago as it was at the neckline of a bottoming pattern.  On the negative side, the price will be encountering the top of a large downtrend channel in the 44’s.  But if Yen breaks down and makes a lower low (to go with its most recent lower high/right shoulder) and DXJ breaks above 45 it would target the 52 area based on the pattern’s measurement.

dxj weekly chart

Buy Target: 43.50 to 44.50 (riskier) or a break above 45 with Yen making a lower low (less risky).

Sell Target:  52 or anywhere lower that profit is acceptable.

Stop Loss:  Below 41.50, which would make a lower low per the daily chart or for the ultra-intolerant, a failure of the very tentative breakout above the green dotted neckline (daily chart).

A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.