The Japanese stock market index Nikkei 225 is signaling that we may be on the verge of resuming current bullish trend (see Figure 1)and this may revive the Yen bearish trend.

If you're trading only the Forex Exchange market don't make the mistake of not watching others market for more clues, like the equity market or the Credit market which are having a big impact on forex exchange fluctuations. The world is much more complex and everything is interconnected so that's the reason why we'll have a look to the Nikkei index which is a stock market index for the Tokyo Stock Exchange, in order to make our analysis on USDJPY. We know that in order for the yen to go down the Nikkei index must go up this will be our confirmation. So basically we must have USDJPY going up and Nikkei Index going up as well. Having confirmation from related market can give you more conviction in your trading ideas.


Figure 1 Nikkei 225 Weekly chart
If we take in consideration the Nikkei Nov 2013 advance and project the same kind of movement to the upside Nikkei advance should equal Nov 2013 advance at around 21000 price level.We also have to take in consideration that Nikkei index has finishes 2013 with an staggering increase of +56.7%, which is the largest % gain since 1972 (+91.9%).

USD/JPY is almost flat YTD as low volatility environment has diminished any chances to see any substantial move, but as the summer trading condition are fading away we also can expect some volatility to come back and it may be the case that if Nikkei continue to advance YEN bearish trend to be revived.

Best Regards,
Daytrader21
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