Waiting On Yen – Waiting On USD – Waiting Waiting…

As contrarian as it may sound – you all know I’m looking for an intermediate “top” in USD –  leading to a much larger decline.

The immediate reaction ( obviously ) to the “official end to QE” resulted in a huge spike in USD, sending EUR/USD and GBP/USD lower as well USD/CHF higher.

Today’s “candle” in $DXY ( pin bar ) is now looking prime for reversal, as it will take very little price action tomorrow – to close under today’s low.

This would fall right in line with a bottoming in JPY, and our expectation of “risk aversion” to continue.

JPY_Futures_Forex_Kong

JPY_Futures_Forex_Kong

If you’ve had any doubts of my continued view of both JPY as well The Nikkei – I hope this “blatant example” can finally put them to rest.

The correlation  of “JPY down = risk on” and “JPY up = risk off” could not be more obvious as The SP 500 has done “the exact opposite” over the past week and a half.

Exactly.

I suggested some time ago that the currency pair USD/JPY  “is the market” as Yen is borrowed on the cheap , then converted to USD to buy stocks. This could not be more obvious in viewing the correlation over this last “massive V-shaped move” in both Yen as well The SP.

USD reversal “lower” ( any day now ) and JPY confirming reversal “higher” will put a stamp on the end of this upward correction – and the beginning of our next leg lower.

15 Responses

  1. Anonymous October 30, 2014 / 10:47 am

    Well, while the rest of you are waiting, this ‘little sheep’ went to market and had an awesome long day while the botz and boyz played their games.
    BUT, this little piggy will be shorting the close, so he doesn’t cry all the way home this weekend…

    best to you, Mr. Kong. Please keep up the great work, it is appreciated.
    -dcB

    • Forex Kong October 30, 2014 / 11:14 am

      Great work dcB.

      In retrospect you bet…..taking the long entry some days ago would have made for a great trade.

      Keep up the good work.

  2. Funske October 31, 2014 / 1:52 am

    OEPS !

    • madness October 31, 2014 / 4:24 am

      Well BOJ did it, More QE despite a narrow 5-4 vote split. Can’t see JPY strengthening any more this year on the back of even a major risk off event. BOJ determined to devalue their currency and what with an additional commitment to buying more stock, can’t see a major collapse in Nikkie. Certainly can’t see any reason for JPY to strengthen can you?

      No sooner the FED ends QE, it passes the baton to BOJ. Central Bank Collusion? Who knows.

      Currently taking a hit on cadjpy, will wait for CAD GDP figures then cut the lot. We are in for some serious weakness in JPY. Remember what JPY did towards the last year? Kept on weakening and didn’t stop, looks like similar pattern emerging.

      So close to throwing in the towel with trading this year. Made some good monies over the year but trading has now become about reading the Central banks rather than valuing fundamentals. Broken system which is now leading to even more desperate measures by the powers that be.

      • Forex Kong October 31, 2014 / 4:29 am

        Well said.

        This is unpresedented and puts into question wether anyone stands a fighting chance approaching markets from the usual technical / fundamental angles.

        What can you do sitting across the table from guys that have an endless supply of chips, and can afford to go “all in” on every hand?

        Not what would call a “freely function market” by any means.

      • madness October 31, 2014 / 5:12 am

        Totally agree

        What is even worse are the market participants who do not look beyond the “immediate release” to question why such disastrous decisions being taken and the long-term implications of them, they all just momo trading, all thinking they will be the first out the gate when it starts to go wrong.

        See a real currency war brewing especially in Asia due to JPY weakness, we all know how that ended up. Can’t see how commodity currencies can rally given their biggest markets are Asian countries. AUD/NZD econmoies should be hit hard especially as these Asian economies can no longer affter AUD/NZD goods.

        Ooops – there I go again with my fundamental analysis based on reasoning. How big an idiot am I? Should have learnt 6 years ago that fundamentals no longer matter!!! My apologies to you and all your readers Kong for littering your page with fundamental nonsense.

  3. Funske October 31, 2014 / 5:06 am

    What can you do ? Don´t fight them, join them. The yen will be destroyed and needs to be destroyed because this 2 percent inflation target has to be reached to have a very small chance of a temporary survival considering the nearly 300 percent debt to gdp.

    Moreover, the Japanese pension fund will cut their position in bonds so another buyer needs to step in and that can only be the BOJ.

    Don´t worry about risk aversion and the unwinding of the carry trade, central banks can´t let that happen. Any unwinding of the carry will be short-lived.

    • Forex Kong October 31, 2014 / 5:12 am

      It’s easy to just say “go with it” as that’s what we are “supposed” to say right?

      A quick change of heart to “just screw it” and get long here could just as easily be the mistake, as it’s just too soon to tell.

      Is this unpresedented move by The BOJ enough to just “reverse” every fundamental factor, across the entire planet?

      I guess we’ll need to see how “the rest of the world” reacts here in coming days.

    • madness October 31, 2014 / 5:16 am

      Funske. Until one day you wake up and there are no bids in the market? I’d rather chose not to play the game than play knowing that they can turn the tables on me at any time.

      Lets not forget the vote was 5-4. Hardly a majority and can easily be changed the next time they vote yes?

  4. Anonymous October 31, 2014 / 5:21 am

    Happy Halloween — short the close, and enjoy the weekend — that’s the plan!
    short term change in trend about to begin…
    best to you
    -dcB

    • Forex Kong October 31, 2014 / 5:26 am

      One would have to imagine “some of this massive spike” is retraced at the very least.

      Tomorrow / monday will be “extremely telling” as to wether the entire planet takes BOJ action and “runs with it”……or stuffs it back in Japans face.

      What a racket.

  5. Anonymous October 31, 2014 / 9:08 am

    Kong erases any comment that challenges his view. Be wary. He will not look at other views of the market or admit to being wrong. Very dangerous. TIMING MATTERS in trading.

    • Forex Kong October 31, 2014 / 9:12 am

      I’m always open to other views…and only offer mine as “one of the thousand” other guys out there with their own.

      Of course timing matters.

      Sitting out one move with plans to execute on another is a perfect example of that.

      You can’t possibly catch every single wave / squiggle and I make no effort to.

      I’m bearish in my fundamental view, and would “prefer” to trade in that direction at this point.

      You and everyone else are more than welcome to make your own decisons – and thats what makes a market!

    • Michael Penthouse October 31, 2014 / 10:08 am

      It’s his blog. He can frigging do whatever he wants! Open your own blog and post your opinions there daily.

      • Forex Kong October 31, 2014 / 10:16 am

        Thanks Michael…its no thing – I’m used to it.

        However….for those with “opposing views” it might be of interest to readers if they could at least provide some kind of “alternative” as opposed to just slamming mine.

        If this kid didn’t see the correlation of JPY printing and higher U.S equities before today then I’m sure my post makes much more sense now.

        JPY cratering and “all that newly printed Yen” flooding out into markets abroad – pushing SP to new highs.

        It’s so blatantly obvious. Anyone with even basic knowledge sees this….in fact I just caught the CNBC gang making light of the same!

        Perhaps these kids need to hear it from their own talking heads.

        “Television shepards with living room sheep”.

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