Correlation between DXY and USD/JPY
Let’s start at DXY, if you look at the beginning of the year you can see we topped out just under 104 and then dropped during January down to 99.2 area which lines up right with the 38.2 FIB. If you move over to UJ, you can see that at the beginning of the year we started 118.5 area and during during January we dropped down to essentially the upper 111s. If you take a ratio of that fall, DXY dropped 450 pips and UJ dropped 650 pips, you get 1:1.44. Which essentially means that for every pip that DXY goes up/down, UJ will go up/down roughly 1.44 pips. With that being said, from my observations it appears that DXY is going to be moving back up to the 103.00 area moving roughly 100 pips from where it is now. Using my ratio above, that would mean UJ should go up around 144 pips from where it is now. Coincidentally this area lines directly up with the 1.236 Fib extension. I think with the recent push with the dollar we may see some draw down before this move occurs but it goes along with my prediction that I had about two weeks ago. Green arrows go with my bullish idea above. Red arrows line up with my idea below. Blue arrows are from my idea about two weeks ago. I linked my DXY chart so you can see a visual rather than having to chart yourself.
On the other side I have a trendline drawn on UJ that it just bounced off of so it very well could reject and go back down to test the 112.5 area where I have another trendline drawn. I have a couple of pendings setup on my demo account to test my theory. With DXY breaking the 61.8 I see this continuing bullish but my other thought is it could have just passed the 61.8 but when it retests it, it will fall back down to the 50 and then go back up to the 103 area.
Let’s start at DXY, if you look at the beginning of the year you can see we topped out just under 104 and then dropped during January down to 99.2 area which lines up right with the 38.2 FIB. If you move over to UJ, you can see that at the beginning of the year we started 118.5 area and during during January we dropped down to essentially the upper 111s. If you take a ratio of that fall, DXY dropped 450 pips and UJ dropped 650 pips, you get 1:1.44. Which essentially means that for every pip that DXY goes up/down, UJ will go up/down roughly 1.44 pips. With that being said, from my observations it appears that DXY is going to be moving back up to the 103.00 area moving roughly 100 pips from where it is now. Using my ratio above, that would mean UJ should go up around 144 pips from where it is now. Coincidentally this area lines directly up with the 1.236 Fib extension. I think with the recent push with the dollar we may see some draw down before this move occurs but it goes along with my prediction that I had about two weeks ago. Green arrows go with my bullish idea above. Red arrows line up with my idea below. Blue arrows are from my idea about two weeks ago. I linked my DXY chart so you can see a visual rather than having to chart yourself.
On the other side I have a trendline drawn on UJ that it just bounced off of so it very well could reject and go back down to test the 112.5 area where I have another trendline drawn. I have a couple of pendings setup on my demo account to test my theory. With DXY breaking the 61.8 I see this continuing bullish but my other thought is it could have just passed the 61.8 but when it retests it, it will fall back down to the 50 and then go back up to the 103 area.
