The U.S. Dollar has dropped a 'very large' 4.4% in the last five trading days versus the Japanese Yen as the value of one Dollar in the Japanese currency (USDJPY) continues to trade below its 200-day average, and closed on Tuesday at ¥101.532. After making a strong comeback from April to mid-August, the momentum has turned again, and the Dollar has been taking a beating over the last two months. EventEdge indicates that the beat down will continue for at least the next couple weeks.
Q: How has USD/JPY responded to a 'very large' five-day loss coupled with trading below its 200-day average in the month of October?
A: According to the 12 previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge indicates that USD/JPY has shown a very strong bearish edge that peaks four trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Tuesday, Oct. 7, 2008) is Monday, Oct. 13, 2008.
USD/JPY declines in 100% of the cases (12 of 12) by an average of 1.0% relative to the close on the event date. The overall return of the 12 cases is -1.0%, which, based on the close of USD/JPY on the event date (¥101.532), provides a target price of ¥100.5167.
To see this in EventEdge® click here.
Mickey Schoenhals is an analyst with Markethistory.com.
