JPYUSD: 06/05/2017


The chart above illustrates the current Kondratieff cycle in the JPYUSD currency pair. It seems evident that we are currently in the terminal 18 year cycle i.e. the final 18 year cycle within the current Kondratieff cycle. This means that we have initiated the Kondratieff cycle correction and this market is likely to make it significantly lower going forward. Unfortunately we lack the data of the previous Kondratieff cycle correction so we are unable to determine how low the JPY is likely to go. We have reason to believe that it is likely to suffer from the most severe decline since the outset of currency trading considering that such a large cycle correction did not occur since 1971 with the collapse of the Breton woods agreement. From an Elliott wave perspective it seems evident that the JPY staged a five wave advance into the Kondratieff peak in 2012 and we are currently in the ABC correction with wave C yet to come. It is important to note that C waves are usually the most destructive which fits very nicely with our interpretation of a significant correction from a cyclical perspective. I would personally wait for a break of the 54 month FLD to the downside before considering shorting the JPY since such a break would indicate a peak of the final 54 month wave within the entire Kondratieff cycle that started prior to the beginning of the data on this chart.


The chart above shows my phasing analysis as well as the most recent similar cyclical circumstance. If one is to take a step back and look at the astounding similarities between the two periods one is to become a firm believer of similar cyclical circumstances. Unfortunately we do not have a terminal cycle on which to base our forecast although we have reason to believe that the peak of the 54 month wave is likely to occur in the first 18 month wave as was the case in the previous 18 year cycle which theoretically would have experienced more right translation than the cycle we happen to be in at this current point in time. This is why there exists a possibility that the peak of the current 54 month wave could potentially have been realized prior to the recent dip that was accurately called earlier this year. In any case, speculators ought to be watching the 54 month FLD for confirmation of the peak of that particular wave that will likely result in a significant deterioration of the JPY against the USD and many of the other European currencies.


Charted above is the projection based on the previous 18 year cycle position. The time of the advance is almost up which is another reason to believe that the peak of the 54 month cycle could potentially have been realized prior to the recent dip experienced in the JPY. The projection suggests that the Kondratieff cycle low is likely to be realized in 2020 in terms of the JPY. I believe we are potentially looking at a currency collapse considering that the USD is likely to decline substantially against European currencies and the JPY seems bearish against the USD. This suggests that the JPY crosses are likely to be the best currency trades going into the magical year of 2020. This is very strange considering that during the great financial crisis the JPY crosses declined significantly considering the funding nature of the JPY due to its very low interest rate. It certainly should be interesting to see how all of this ends up playing out.


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