Technical analysis of USDJPY and S&P 500 – chained by one chain!!!

“To what progress has reached …..”. Since the opening of the American session on Friday, we could observe a very interesting picture. The Japanese yen (pair USDJPY) traded in a very tight correlation with the S&P 500 index.

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Explain it is something other than setting up trading algorithms or robots is impossible.

On the M1 chart, the candles are USDJPY, the blue line is the S&P500 index.

Correlation USDJPY-S&P500

At the same time, the Japanese yen fell below support (green line) and update the minimum since September 2017. And the breakdown of the support level almost coincided with the turn in the S&P 500 index. The stop-orders of the traders did not bother the robots at all, so there was no acceleration or resistance in the breakdown of the support level for six months. Imagine only to yourself what trading volumes were behind these robots, that the foreign exchange market simply did not notice the presence of other traders in the foreign exchange market.

So think next time how to apply all your knowledge on technical and fundamental analysis to work in the forex market. Neither the growing dollar, nor the yield of US or Japanese bonds, nor the fluctuations of the euro, nor any other market factors were of interest at this time for Japanese yen robots.

If someone was watching this entertaining process (and it was like a great movie), then it was clear how the movements are practiced in teak tick. I do not really understand at what point they managed to fix the profit on the yen, on the chart it was not noticed. Accordingly, with the closure of the US market, the robots did not understand for a while what to do next, and the USDJPY pair stopped and stretched out into a string on a minute chart. You can see it in your trading terminals.

The fact that the Japanese yen is a safe haven and is used to avoid risks is a well-known fact. However, I observe this close connection with the US stock market for the first time. When this ends it is impossible to say, but while the market is dominated by fear and avoidance of risks, it is necessary to track the relationship between the pair USDJPY and the S&P500 index or simply not trade the Japanese yen.

Let’s hope that trading robots will also want to rest a bit or go out for a glass of cold beer. And is there any place for people in this modern world of trading in the forex market???

Continuation of the analysis of the situation with the Japanese yen on the next trading day read in this article.

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