The Japanese yen just had its worst week in years…
Seriously… the yen fell 4.1% two weeks ago, its worst one-week fall since 2009.
That alone is a rare event. But there’s something even rarer about this big decline.
The computers behind our high-priced True Wealth Systems service helped spot this anomaly. And based on history, it will lead to even greater losses in the yen, starting now.
Let me explain…
A 4%-plus weekly fall is rare for a major currency. In the case of the yen, we’ve seen one-week losses of 4% or more only 11 times going all the way back to 1971.
That means these large one-week declines happen less than once every four years, on average. But there’s something even rarer in this case…
Again, this isn’t something most folks would notice… even folks who track the currency markets closely. But our True Wealth Systems computers helped spot it…
You see, most of the yen’s large one-week declines came while it was already in a downtrend. But this month’s major loss came after the yen had been making new highs.
Specifically, the yen hit a 52-week high at the beginning of July… and then fell 4% in a week starting just a few days later. That situation has only happened four other times since 1971… making it incredibly rare.
Importantly, these were not good times to bet on a higher yen. All four occasions led to losses over the next year… and major underperformance versus the typical return for the yen. Take a look…
| |
1-Month
|
6-Month
|
12-Month
|
|
Return after extreme
|
-1.5%
|
-0.4%
|
-5.1%
|
|
All periods
|
0.2%
|
1.4%
|
2.8%
|
A 5.1% loss might not seem large… But remember, this is a currency. Currencies tend to move glacially compared with other markets.
Even so, this shows a total underperformance of nearly 8% versus the typical one-year return for the yen. That’s huge for a currency.
What is happening here is simple: The yen was in an uptrend. It was making new 52-week highs. But then it suffered a terrible weekly return. And history says this usually signals the end of a major move higher.
Is a new downtrend beginning? We can’t know for sure. But history shows that betting on a higher yen today is a bad idea.
The smart money says the yen will likely fall even further over the next year.
Good investing,
Brett Eversole
Editor’s note: While Brett is bearish on the yen, he’s equally bullish on a “secret currency” that is like gold… only better. The last time conditions were this good, this investment rose 665%. Learn more about this opportunity
right here.
Source:
http://www.stansberryresearch.com/dailywealth/3342/the-japanese-yen-is-on-the-verge-of-a-major-fall
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