As of late last week/coming into this week, the USDJPY threw me for a loop. Mainly because the daily chart was showing a rounding bottom with tightening bollinger bands & price constantly getting bought below 109.00.

Monday hit, and it gapped down but recovered. Tuesday it got slammed down, and Thursday was really the last chance to trade up and hold things together. Instead, it traded down even further and blew the Bollinger bands open. Today(Friday) was continuation.

My realizations as of today –

  •     I believe a few people were hoping/expecting for a pullback in gold soon. I’m one of them. If nothing happens this weekend with Kimmy, then at most, a small backtest of the breakdown point ~108.50 is possible. But it’ll be very short. Hell, I’ve come to the conclusion that based on the expanding bollingers, even TODAY/Monday are still a good entry. I’ve explained my love for the bollinger bands here a few times. They are very helpful and reliable. Once they start expanding, the move is set in motion. Sometimes the bands only expand weakly(not very vertical), and therefore it’s a weak move. But the more vertically they get blown open, the stronger the move. That bottom bollinger got expanded pretty vertically in the past 2 sessions.

 

  •      We can now see the chart is currently playing out as a near exact fractal of Dec.29-March 20. The 2 fractals are the black lines that i drew on the chart, followed by breakdowns. Unfortunately there was no way to know this would happen until the recent breakdown in price, but now that we see what’s happening, we can forecast how far it may go. The first fractal broke down from a 6 point range 117.7-111.70 and produced a 3.4 point move. This current fractal is breaking down from a slightly smaller 5 point range 114.00-108.70. So I expect a slightly smaller move of 2-3 points from the 108.50 breakdown point. That would theoretically propel gold another $25-35 based on the corresponding move during the first fractal.