Donald J. Trump officially sworn as the 45th president of the United States yesterday. And if the stock market remained relatively calm during the week of his inauguration, the USD/JPY pair has been very interesting to watch. After opening at 114.31 on Monday, it fell to 112.56, before bouncing back up to 115.61, only to close almost unchanged at 114.48 on Friday, January 20th. But instead of trying to decode what could Trump’s numerous tweets and speeches possibly mean for the economy, the dollar or whatever, we prefer looking at things from the perspective of the Elliott Wave Principle. The chart below shows what it has been suggesting about USD/JPY before the markets opened on January 16th.(some marks have been removed for this article)
This chart depicted the alternative scenario included in last week’s premium issue. While the primary one was bullish right away, we mentioned that according to this one, “a new swing low below 113.75 cannot be ruled out.” However, the bullish reversal was only a matter of time, because the entire decline from 118.66 looked like a correction with a triangle in the middle of it. Triangles precede the last wave – in this case wave y) – of the larger sequence. So, instead of listening to Trump’s comments that the dollar was “too strong“, we thought it was about to get even stronger against the Japanese yen. A week later, here is how USD/JPY’s hourly chart looks now.
Presidents come and go, but the natural law, which governs the markets remains the same. From an Elliottician’s point of view, it does not actually matter who is in the White House, because all he needs is a chart and the ability to read its message. Here, USD/JPY’s Elliott Wave message sounded similar to “do not sell – reversal ahead!” Not a single word about Trump.