USDJPY weekly

This is starting the move up

Attached Images

 

Regardless of what direction you might take, something is going to happen with USDJPY soon (likely Monday). We have a good wedge formation that is a perfect setup for either a breakout or pull back range.

With the 4Q Japanese GDP numbers due early in the Tokyo session Monday, we have a high risk of volatility. And, even if this data comes in line such that it matches what market participants were pricing in, we could simple see this pair produce a very easy range.

This will be a very interesting piece of event risk. A really terrible Japanese reading certainly wouldn't be good for the global growth outlook; but a rally from USDJPY will likely be followed by breaks through the rest of the yen crosses. That could trigger a technical rally in risk appetite - though fundamentals are still dour. Perhaps true reason for confidence in the US stimulus plan and encouraging news from the G7 meeting will spark the perfect storm for a reversal in risk trend...

What do you guys think?

Attached Images

 

__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

The USDJPY held firm yesterday as the market sold off. The USDJPY has went straight up today despite intraday corrections in the SPY. Nuff said.

Market is well short, especially retail margin traders in Japan itself, I think the big players are about to clean them out just like they did with NZDJPY and AUDJPY...

looks good for a breakout to top side, but unless you are in from the low 90's you could get hit, buy the break at about 92.60 imho if you are not long from below here....

this will take kiwi and aud up on stops as well....

Disclosure - long at 90.55 and 90.71 will add on break above 92.60

No one told me stops don't trigger over the weekend if theres a jump!
ech i just lost 400 pips because now i've been losing without any stops!
What on earth this is UGHHHHHHHHH

can i file a complaint somewhere or do i just have to take these losses ARGH.

sorry, just have to vent. all that hard work out the window. ridiculous.

this is why you leave nothing open over a weekend that has major news happening like a senate vote on the biggest stimulus package in history

sorry no complaints to file, read the small print

ok... i relogged in it seems that 1 of my stops triggered, only 200 pip loss now.. but sheesh thought i was safe with 'stops'. have to learn things the hard way i guess. man what a weekend to learn my lesson on...

I rarely leave a position overnight or over the weekend..

I too, have learned the lesson..

made a few clicks on the pull backs and got my money back. I'm done for the day, I'm happy now. (if anyone cared). This could have ended a loot worse.

Interesting stim package passed with no republican help... kind of scary. well to try to keep this on topic... I'll add my very non-professional take on the USD/JPY.

I'm thinkin if this can push & close above 92.50, it will make it another 100 pips to 93.50. but it looks like there's a lot of resistance at 92.50 so that could be a good place to short.

I guess we are all waiting for the Japan GDP numbers. Who is going short ahead of the numbers? I am not, but wondering if there are any bravehearts out there.

Seems like not a great reaction to the GDP data. I shorted 91.7, target 90.2 .

It looks like 90 might just hold, and resistance at 92 is not giving way either..

I think there are risk aversion flows (the Ireland and Eastern Europe stories, plus GM, etc) that are canceling out the GDP trades. But, I am beginning to change my outlook on Yen. It it looking like what is happening is Yen is losing its luster as a safe haven and more of the running-scared money is going in USD or CHF instead. This GDP print might be the thing that accelerates the trend. You're scenario, Lang, may play out sooner than 3 years if that happens. I have been myself waiting for at least a 38.2% retrace of the plunge as a healthy correction of the safe haven trade ... but if Yen actually loses its safe haven status, then 100 would be a very reasonable initial target.

We may get more pull backs before 92 gives way, but I think a test of 94.50 is still coming since the Geithner sell off was short lived. The 87.09/88.58 trendline is now above 90.

Wall Street hates this "stimulus" plan. It should be interesting to see the market response to this on Tuesday. Maybe it is all priced in since passage was widely expected. To buy the U.S. stock market or risky assets you have to believe in the greater fool theory. The one thing that might drive the USDJPY higher is the hope of Wednesday's Obama speach on foreclosure bail outs. I will try to hold my long postiion through Wednesday.

What did you make of the USDJPY rally to 92 while US equities were trying to sell off last week? USDJPY has a more forces acting on it than equities.

Well, I am always on the look out for changing relationships. If something is not acting the way it has been or should be I take note. The fact that the stock market was falling and the USDJPY was not is enough for me to put on a trade. When you combine that with a near exact double bottom and the fact that the noncommercial traders in the COT report are very bullish the YEN I think you at least have the possibility of a turn should there be some kind of catalyst. Maybe all of these bailouts, who knows? And the S&P futures seem to have a propensity to bounce off of the 800 level.

Also, China and Brazil are demonstrating relative outperformance. Even Australia and commodities are showing signs of stability. Oil stocks are acting very well also predicting a rebound in demand IMO.

My personal belief is that efforts to revive the U.S. economy will fail. Obama is going to announce some type of plan to address the large buget deficit according to the news wires. Of course this means taxing the rich which will kill consumption. The U.S. consumer is dead and that is very bad for Japan IMO since they rely on exports to the U.S. Even Europe relies on the U.S. on the margin because they export cars to the U.S. and autos are 1/5th of the German economy. The poor fundamentals of Europe and Japan are catching up to the trade.

I would endorse John Klicklighters analysis of the USD and JPY and suggest that anyone trading this pair read his analysis in the Weekly Forecast. Good stuff.