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Risk-off mode Suggests More Weakness on Stocks and On XXX/JPY Pairs


March 11 2019
Hi traders,

the SP500 has turned lower this week, sharply out of the channel in a fifth wave which indicates a completion of an impulse and temporary top at 2800 resistance. We think that a minimum three waves down are in progress now, so more weakness is expected, possibly even back to 2620 after wave B bounce. At the same time this can be the right shoulder in the making.

S&P500 chart

In risk-off mode JPY is normally the safe haven, so it's not a surprise to see JPY much higher this week, as 10 year US note rises. In fact, 10 year shows a resumption higher into a fifth wave which suggests that there is a chance for more risk-off ahead. There was also a nice breakdown on Nikkei index so money definitely moves into JPY.

In such situation we may look at weak XXX/JPY pairs for possible shorts, and based on correlations we see USDJPY and GBPJPY as one of the weakest pairs in current environment.

USDJPY, 30Min chart



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