The U.S. dollar continues to deteriorate in value versus the Japanese Yen (USD/JPY), approaching support at the low set in 2004 at ¥101.7, which was a test of the previous low in 1999 at ¥101.3. The exchange rate closed on Monday at ¥103.466, down -0.2% on the day and a 'very large' drop of 4.3% over the last five trading days.
Q: How has the Dollar in Yen exchange rate perform in the past when in the month of March it has seen a 'very large' five-day decline when the rate is below its average rate over the last 200 trading days?
A: According to the 11 previous occurrences of this event, EventEdge indicates that USD/JPY has shown a strong bearish edge that peaks seven trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Monday, March 3, 2008) is Wednesday, March12, 2008. USD/JPY declines in 91% of the cases (10 of 11) by an average of -1.8% relative to the close on the event date. The average of the one rally is 0.4%. The overall return of the 11 cases is -1.6%, which, based on the close of USD/JPY on the event date (¥103.466), provides a target price of ¥101.8105.
If you would like to see more details of this historical edge, go to www.markethistory.com This trading idea came up in our Nitro scan and you can see more details of the analysis in our HYPERLINK "http://www.markethistory.com/content/events/fx/chart.html?ticker=USDJPY&events=DownBigVL5day0,BelowSMA2000,month&date=2008-03-03" EventEdge® tool.
Gibbons Burke is editor of MarketHistory.com.
