Yen At 5-Year High - What's Next Part 1

The financial markets, especially currency traders, are betting that the Federal Reserve will raise rates sooner rather than later. Couple that with the idea that the Japanese central bank will likely hold rates steady - and you have the dollar earlier today crossing 116 yen for the first time since early 2017.

At Excalibur Pro, we have several tools that can be used to get a sense of market direction and momentum. Here, we will look at the Markov process - an approach that looks at 5 years worth of returns and volatility to help understand current trends and where markets may be headed.

Looking at our chart for the daily Markov values over the past year, we see a handful of periods where the State 2 signal remains very strong. And when that happens, the dollar steadily rises versus the yen. We are in one of those periods now.