We can't stress this enough. Whichever asset class you choose for your stock market transactions, it's highly advisable to keep an eye on what's happening in the other asset classes, as the interrelationships are so important. The recent example of the USDJPY is a perfect illustration of this. And there's no better way to judge than with a little chart!
Source: Bloomberg
The chart above shows the evolution of the USDJPY in daily data (upper panel) since the beginning of the year. The lower panel shows the Nasdaq 100. Particularly striking is the similar behavior of these two seemingly unrelated assets. It is interesting to note that the currency is now close to an important support at 140.25, which also corresponds to a classic Fibonacci retracement of the bullish sequence between January 2023 and July 2024. The presence of bullish divergences on the RSI, combined with the shape of the last decline since mid-August, suggests that the market has recorded new lows "under its own weight" and not as a result of massive selling. This behavior is traditionally associated with at least a temporary market low. Recovery potential lies between 148.40 and 150.40. Only a sharp break of 140.24 (at 139.50 extreme) would undermine this recovery scenario and open the door to 137.25.
Elsewhere in the world, the EURUSD couldn't help but test 1.0980 (as well as 1.3008 on the GBPUSD), a critical threshold which must not be breached if the upward momentum underway since the start of the summer is to be maintained.
