The Japanese Gold Trapped In A Large Consolidation

Aibek Burabayev - Contributor - Metals

This topic was promised in one of my previous posts to our readers, and I am pleased to offer it to you today. I was waiting to see the end of the month price action to try to write when I considered all the moves within a month for more accuracy. Carol and Diane, I should admit you are very brave ladies as when I opened GYEN (The AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)) chart I was shocked by all the crazy and abrupt moves there. The history of this ETF is quite short (from 2014), and the analysis based on it would not be solid. At the end of the post, I've added the GYEN chart for you to judge for yourself. I picked the gold/JPY chart instead for analysis as the ETF tracks the price of this pair. I hope you will enjoy the post.

Chart 1. Gold/JPY Monthly: Multi-Decade Uptrend Is Intact

Monthly Chart of GLD/JPY
Chart courtesy of

The multi-decade uptrend highlighted in the chart reflects the trends of both the gold/$ and $/JPY markets. Those markets were extremely bullish for the past decade, and the gold/JPY strong upside move shows the synergy of them. The Big Bull Run here stalled in 2013 while gold/$ stalled two years earlier in 2011. The reason is that the $/JPY bullish move stopped last year and helped to extend the upside move in gold/JPY and then to soften the downside pressure from the falling gold/$.

The rising trend is still intact, and we are in a sideways consolidation, which shaped the Triangle pattern on the chart. The price has spent 3 years in the pattern, and we can be trapped here for more time. I put the green zigzag to show you the common price behavior within triangles. We can touch the upside and then again downside before the Bulls will gain enough momentum to break above the resistance. We should take off the previous high (2015) at ¥154800 to get the long-awaited relief.

The long-term target for a triangle is measured by applying the distance of the triangle’s base to the breakout point. The preliminary target calculation points at the ¥190700 area, right at the upside of the channel. I said preliminary, because we don’t have the breakout yet. We would face the bearish scenario once the price will dip below the 2013 low at ¥116400.

Chart 2. Gold/JPY Daily: Price Is Going To Check The Resistance

Daily Chart of GLD/JPY
Chart courtesy of

Above is the snapshot of the short-term situation on the market. The price broke out of the downtrend (wine-colored) in February rising above the October 2015 high (marked as a purple AB segment). Then the market made a very deep, but common 61.8% Fibonacci retracement (not shown) down and finished it in the current month. After the pullback, the price reversed to the upside streaming to fill in the zigzag, which I highlighted by purple AB/CD segments.

The move looks healthy, and if the CD segment ends equal to the AB segment in length, the price should stall right ahead of the triangle’s resistance (described in the Chart 1) around the ¥150000 mark. We should be patient and wait to see if gold/JPY can crack that resistance. That would give a clue of further direction.

As promised, below is the chart of the GYEN ETF.

Chart 3. GYEN ETF Daily: Wild Intraday Volatility

Chart of AdvisorShares Gartman Gold/Yen ETF (NYSE:GYEN)
Chart courtesy of

One comment from my observation – this instrument is good for a buy and hold technique (or ‘stay away’ approach). Short-term players and scalpers should avoid this ETF as those wild pins on daily charts can ruin their strategies.

Intelligent trades!

Aibek Burabayev Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.

4 thoughts on “The Japanese Gold Trapped In A Large Consolidation

  1. Good morning Aibek! You can see that i had my morning coffee this morning. I
    did not misspell your name this time, HA. I was alerted to the GYEN trade in a publication
    i subscribe to written by currency expert Jim Rickards. He sees the yen going to
    0, not immediately but over a period of several years. Like he mentioned trying to
    trade the yen on the short side is a losers bet. The chart demonstrates clearly that
    many have tried but failed on the short yen position. He has the potential of the
    GYEN trade $45.00 /share for patient long term investors. He is obviously
    very bullish on appreciating gold prices and a severely declining yen for his prediction
    to materialize.
    I'll post thoughts on Rickards dire long term yen prediction when i have a bit more time.
    GREAT , intelligent post Aibek. Thanks for answering our request. God Bless, Carol

    1. Dear Carol, thank you for spelling my name correct ))).
      Don't know which time frame shows zero in yen.
      As far as I can see, we are currently in a correction in usdjpy down (yen appreciates) and it also coincides with the dollar index downside correction. After we finish, we gonna see yen lower dollar higher, but it still will be way too far from zero yen value.
      Yes, the graph tells that Gold is going to rise against the falling yen.
      Appreciate your warm feedback!
      Best regards, Aibek

      1. Thanks Aibek. I like to look at trades that are off the radar of
        most investors. 0 for the yen is quite an extreme position.
        Thanks again for your review of yen/gold relationship. Carol

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