USDJPY looks to be forming a wedge on the 240-minute time frame. These short-term formations seem to be a common occurance for this pair since it has developed an annoying habit of choppy trending - which would easily shake out close stops. In this way, USDJPY's behavior looks to be mimicking an equally frustrating pair - USDCAD.

I hesitate to make a projection on this breakout. However, we were triggered on a long range trade recommendation on FXCMTR a few days ago, and I should offer an outlook for that reason alone. This wedge seems to be developing going into the FOMC meeting, which is questionable event risk in itself. I'm not expecting much from the statement or a market reaction after it - especially after the volatility let down this past Friday on NFPs and the Friday before that with GDP. If the FOMC proves to be a non-event, I see continuation in the overall uptrend. And, if there are any alterations in the carefully structured statement (which many traders would jump on), I think it would come with a pumped up inflation warning and a dimming of the growth forecast on the weak quarterly number.

Of course a drop is a probable scenario; but it the yen is appreciating, it would have widespread implications that could bring about a number of oppurtunities in the crosses for a short bout of carry unwinding.

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Do you think we could see a massive carry trade unwind and JPY gains in the week ahead. Or do you think (like me) that this was just a small correction?

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The upcoming BoJ meeeting can set the yen up for a big tumble or rallly. People are expecting a hawkish tone with all the liquidity in the market, however, the recent dissapointing machine order numbers may change their tone, either way keep an eye on it. Personally despite the technicals saying otherwise, I look for a rally in the Yen, I don't think the machine order number is going to change their tone.

I agree with you that there is liquidity to be sopped up and that the machine orders number is not a concerning number since business investment still seems pretty strong. However, I'm not convinced that they will be any more hawkish this time around. They certainly can up the pressure, but that would diverge from their past MO of 'conservatism above all else.' I'm sure they also have pressure from their government saying they want a smooth election this summer with no interference from the BoJ. On the other hand, I think foriegn politics and growth are the best back up for your argument. Local growth is still strong through an annualized 5.5 percent pace in the fourth quarter (though expectations for Thursday's 1Q number is considerable lower). Most forceful perhaps is pressure from overseas to support the yen since it is so low and is contributing to global trade imbalances. I think probabilites have it ultimately as a non-event, and the yen will be preoccupied by the GDP number.

Ok , I screwed up. So go easy on me ...

A buddy of mine talked me into getting into forex a few months ago. Instead of trying a practice account for a year or so , I thought I would jump right in.
I started off doing ok - not huge gains but hey , a little bit helps.

THEN i took his advice and shorted usd/jpy at 116.95. And instead of getting out , i stayed in. Now i am about 5k in UP&L.

So , my question is .... Should i take the loss now or stay in and hope for a reversal later this year. I could handle it up to 130 or so and not get sold off. but i hate to even think of the loss if that happened.

At this point i would just like to minimize my loss.

Any suggestions. And thanks to all who flame ahead of time ....

Ooh, not a pleasant situation but I'm not gonna go ahead and rub salt in your wound... I think you are in enough pain as is.

If you look at a daily chart, you will see there is a pretty strong trendline building for a long position since March 2007. But you will also notice that there is some serious resistance at 122.00. If you sell now you are totally out of luck. One thing you can do is deposit just enough more to make sure that if it hits resistance you don't get taken out and then pray it goes down to a level where you either have minimized your losses or even potentially break even or better. If your position consists of several lots, you could also close out part of your trade to give you about 200-230 pips to move in....I really doubt it will go above 122.00 but it's certainly not impossible. Just a thought. I'm definitely not telling you what you should do....it sounds like you are willing to stay in though...

I really appreciate the advice. I can handle waiting til 122. And i guess another 100 pips in the grand scheme of things is worth the risk to see if it drops back down some.

Thanks for being civil about it. I figured I would have to wade through several off color posts before I got to a good one. Glad I was wrong

The yen is really very contingent on the equity market flows. For more insight you may want to check our piece today.
http://www.dailyfx.com/story/bio2/Ye...397873736.html

Sorry, I can't offer advice to you Johnny, but perhaps you would get some pleasure in knowing that you have some company in the 'USD/JPY short' situation. I've got short positions at various levels from about 120.40 up to 121.20. At this stage, I haven't lost any more than my previous profits from trading my FXCM account, but I admit, I have been caught by the sudden upsurge of the USD/JPY over the last couple of days. I've got my fingers crossed that we see a reversal sometime soon as well!

Good luck!
Thanks to all who contribute

FYI from our latest report

As we were about to go to print, news hit the wires that PBOC will widen the yuan/dollar trading band from 0.3% to 0.5% and yen immediately fell through the 121.00 barrier but bounced back within seconds. The move while not dramatic is a clear a gesture by the Chinese authorities signaling their willingness to move the yuan exchange rates closer to a free-floating model. The Chinese authorities now find themselves combating the growing asset bubbles in the Shanghai equity market and have become quite concerned about the possible fallout should it collapse. This policy change is just the latest attempt by Chinese authorities to reign in speculative sentiment in the country by slowing inflationary pressures. In the meantime the announcement should provide a short term boost for the yen and serves as just the kind of exogenous news event that we warned about earlier this week when the currency was being sold relentlessly by the carry traders. While it may be too soon to call a near term peak in USDJPY, tonight’s news certainly provides yen bears with reason for pause as the unit may now find a bid despite the woeful Japanese fundamentals.

Ok , well I was checking my account again and I noticed something. My average rate that I shorted usd/jpy changed. And apparently has been over the last 1.5 months.

I am totally confused. And I know this isnt a help the newbie forum so I dont expect anything too in depth. But i tried to find out and my buddy didnt know and I cant really find anything online. I understand being charged interest but how does my average rate drop over 100 pips ??

I have 2 lots that I shorted around 117.20. They are now at 116.34...

ANY type of explanation would be great.

BTW - i know i first said 116.95. I had thought that was the case but i checked the history and it was higher. It had just dropped from rollover

I believe that we may see the peak at 123 before it reverse, it hasn't been over 123 in over four years.

It's hard to speculate on what the problem is here. You should call your platform provider and try to reconcile it one on one with a sales person. They should be able to ferret out the problem and if it is an error on their end, they can reconcile it.

If you have an FXCM account, call 888-503-6739; or if you prefer, you can go to www.fxcm.com and click the 'Live Chat' link on the top left hand corner.

This is certainly a problem you should get corrected right away. Even if it is a mistake on your part, its worth the peice of mind to figure out what is going on.

Psychological for non-objective traders, they like to short USD against other currencies, e.g. Euro and Yen.

shorting USD against Euro is less risky than shorting USD against Yen.

Yen is perpetually rising, while the fall comes far apart and shart.

If you short at the wrong level, then it is going to be painful to see interest accumulate over months..... By the way, it is the interest on USD for the full value of the contract that you are paying, i.e. 5-6% on 100K USD.
OR 6000 USD/yr or 600 USD/mth.
or perhaps 1800 USD for 3 months before you get the pullback, the pullback
may not even reach your short level.

116 is awfully far away from current 121.

My GUESS is that 122.19 the last high would be broken again, inching towards 123, not neccessary a strong break.

Expect next couple of weeks, Yen to hover around 122-123 level.

I'm looking at the dollar's performance and there is obviously a technical cross roads for the greenback. We have come up on that 82.60 level of resistance on the Dollar Index and its easy to see that this lines up with levels in EURUSD, GBPUSD, USDCHF, AUDUSD and NZDUSD. This obviously has two ways it can play out over the next few weeks: a return to lows or a breakout higher.

A retracement can be played in many of the pairs, but I would most likly look to play the move in USDJPY and USDCHF since they have so much room to play with in a retracement. Whereas EURUSD, GBPUSD, AUDUSD and NZDUSD are either at all-time or multi-decade highs. Certainly, should the dollar start to falter, the optimal situation for sharp anti-dollar moves would come in conjunction with a carry trade headwind - perhaps from hawkish sentiment or a surprise hike from the BoJ or SNB. I would have a short-term objective on the USDJPY at 118.50 and a distant second target at 115.

At the same time I would play USDJPY for a retracement, I would also use it for a positive dollar breakout. The other majors have tons of dollar-support should the near-term levels be broken, but USDJPY is nearly clear until 125.50 since the pair has not peaked its head above 122.20 since 2002. What's more, a long-term monthly chart shows a very broad wedge that may be nearing its end with a break in the dollar's favor.

Certainly fundamentals from each economy will play a part in the ultimate move, and the long-term outlook on interest rates is clearly favoring a contraction in the yen's favor; but I can always take a short-term break higher and a long-term short objective. All that matters to me is that USDJPY is sizing up to be the best pair to put my money.

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