$FXY's Relative Strength Index Hit a Very Oversold Level The Other Day (Japanese Yen)

FXY, the Japanese Yen ETF, hit an extreme oversold level the other day according to the RSI (Relative Strength Index). The RSI hit 10, which doesn't happen that often. FXY continued to make new lows as RSI moved back up, but the RSI is still below the 30 level, so it is still camping out in oversold territory. I'm not going to try to battle the Bank of Japan's policy actions, but if normal technical conditions still exist, FXI is potentially setting up for a countertrend rally in the near-term after this crazy downside move. It is currently trading at 107.89, and the next support level looks like 104.56, a floor from May 2010. If FXY can jab through that downtrend line, it could start to build a base for a nice corrective rally between 104 and 107, in my opinion. We'll see though. I will soon put up some longer-term outlooks for the yen. Some fund managers and analysts believe the yen will fall substantially from here because of Japan's extreme reflationary policies in place.

Chart source: StockCharts.com
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