If you’ve been trading the Japanese Yen (JPY) alongside me these past few months, I’m sure that you agree….the currency has been a real friend. The steep and steady slide of JPY over the past few months has made for some excellent trade opportunities – for that I am thankful.
Once you’ve tracked and traded a currency this tight, for an extended period of time – you really start to get a feel for its movements. What time of the day holds action, when to sit out, when to step on the gas, or when to sit back and enjoy the ride. By now you’ve got 8 million horizontal lines of support and resistance drawn at levels you’ve now come to know in your sleep. You are now….one with Yen!
As we know nothing moves in a straight line, and no currency exists in a vacuum so….at some point the tides change and your “easy ride down” morphs into some “bumpy days sideways” until finally a correction “upward” is due.
Taking into consideration that JPY is still very much so considered a safe haven currency (as we’ve been over – with Japan holding the majority of its debt domestically), coupled with current fundamentals shifting “towards” risk off behavior I feel the time is coming very soon to flip this one upside down – and start looking LONG JPY.
For me this would manifest in taking “short positions” in AUD/JPY, NZD/JPY,CAD/JPY and possibly several others as markets continue across the top before making their move lower.
Bernanke is on deck for Wednesday with the FOMC minutes being released so…I imagine he’ll want to talk it up that QE is right on track and set to continue. This along with the current fluster of information out of the EU Zone makes for a pretty tricky couple days. I will be monitoring and watching all my previously drawn lines of S/R as they will all just get hit again on the upside.
In this case I am considering that buying JPY will align with “risk off coming into markets” for those of you looking to line up the fundamentals. JPY is a safe haven and is likely “bought” in times of risk aversion.