USDJPY
Today we seen a massive move on this pair and on the daily we have taken the highs and the lows. We seen this pair break right back down to an untested order block and reacted from there This could be the start of the bearish run or just a correction move clearing up liquidity before a continuation to the up side.
I will be looking for this pair to come back down retest the breaker move and then continue to the up side. Targeting the bottom of the last bullish candle and then see what we do from there.
Keep a close eye on market structure and remember key entry and price action will be needed.
Make sure you use proper risk management when trading.
Be aware that the BoJ intervened in the market today - first time in 22 years.
They used foreign reserves to buy Yen - not known how much - will know at end of month.
They have an arsenal of Tr1.3 usd - will have used only a portion and will do so again at the 145.00 level.
So if buying at 145.00 a retail trader will be taking on the Central Bank in a game of dare.
The pair may find its support at the marked zone. A double bottom may attract the buyers to go long and push the price towards the North. However, the last bearish move suggests that the pair may end up making a bearish breakout here as well.
It would be counterproductive for Jaan to sell their USTs.
Selling USTs in exchange for USD would result in higher UST rates. More global capital would then flow into USTs, which would further increase demand for USD, which would mean further USD appreciation.
In a nutshell, selling USTs would have the opposite effect. as interest rate differentials widen between countries (selling bonds increases their rates), USD would strengthen even further against JPY (and other currencies).
What would help is if the BOJ borrowed USD from the Fed using their U.S. Treasury holdings as collateral. Once in possession of the USD, they then sell them in the market for JPY.
Once USD has weakened enough, they can buy it back and pay back the loan.
Theoretically, this should be possible with the Fed’s FIMA Repo Facility.
Of course, this would backfire if the USD continued to strengthen across the board (which it has been).
The best solution would be a globally coordinated move by all major central banks to weaken the USD similar to the Plaza Accord, or the more recent (and secretive) Shanghai Accord.
The problem for the BoJ - well maybe more for the MoF is that it’s buying Yen to strengthen - more a difficult task than weakening - the SNB gave up trying to do that.
I suspect that for Japan there is more power is the use of words than actions.
Likely the 145 level will get tested a few times up ahead - then like the SNB in 2015 intervention will ultimately fail - except of course the Fed become fed up with the USD rise and decide to act.
I know that quite a few retail traders lost not only money but their confidence in Jan 2015 and of course FXCM and Alpari also lost substantially - the hope is that there will not be a repeat.
A free market performs best when it’s free from Govt interference.
Anyways we will know the actual scope of interference soon enough and likely will be surprisingly low - it’s the threat of more that will weigh.
For guys learning - the Plaza Accord was multi govt interference in the market back a few years - things were different then, the market was subject to political interference much more readily than today - the notion of central banks independence hadn’t gained traction.
The Shanghai Accord is the more modern version - apparently happened in 2016 - the G7 of 1985 is now much larger and more conflicting aspirations - a weaker USD may help US expotrts but will it help the EU or China?
Here are some thoughts back 6 years - it’s a safe site.
The pair has been trading within a range in the H4 chart. After making a strong bearish move, it has been moving towards the North. The level of 144.750 may work as a level of resistance. The sellers may wait for the price to produce a bearish reversal to go short in the pair.
Back then a trader posted that the only way to trade is with the CB at your back - then again what happens when/if the CB withdraws - who then has your back?
USDJPY
Looking for a Friday sell retracement of the weekly move.
As you can see we broke right back up to the top of last weeks range and have held at this top range, setting up for a Friday move with a pump back up to the previous highs taking out the range and liquidity from there i will be looking for a 30%-50% retracement of the range and targeting below the relative equal lows.
Keep a close eye on market structure and remember key entry and price action will be needed.
Make sure you use proper risk management when trading.
Looks very bullish to me as far as the H4 chart is concerned. The pair is moving towards the North slowly. A breakout at the up trending trendline may make the pair be bearish for a while. However, the buyers may wait for the price to produce a bullish reversal pattern at the value areas to go long again.
Not quite 2015 but reasonable chance that retail traders on the buy side will have had their stop loss gapped - 540 pip drop in 2 hours - that’s the effect that a CB has on price.
I wasnt trading in 2015 that would be immense gap. Really wards me off trading anything mid to long term for sure. Small short trades for the time being
Last Friday we seen UJ make a massive break to the down side. reacting off the 150 level. since then we had a small retracement and a continuation down. I will be looking for this pair to pull back up above the 50% of the fib and of the entire downward candle. for there we will be in premium looking for sell opportunities.
I have marked out my ideal set up covering the higher range of the move but once we pull up above the 50% mark i will be watching price to see how it reacts in the markets.
Keep a close eye on market structure and remember key entry and price action will be needed.
Make sure you use proper risk management when trading.
Do you thing this is the start of the fall for this pair?
I don’t think this is the end of the bull run for USDJPY - it’s looking like it’s just a pullback to grab some liquidity and continue up. Wouldn’t be surprised if next week we see a continuation higher to take out the weekly high formed last week.
