Tagged: trading JPY
Nikkei Down -638 Points – Long JPY Trade Is Gold
The Japanese Stock Market ( The Nikkei ) is now down -638 points as Americans start “waking up”. China has cratered.
How are the long JPY trades going? – Absolutely golden!
The relationship between “risk appetite” and The Japanese Yen ( JPY ) has never been more clear, as short trades in AUD/JPY, NZD/JPY, CAD/JPY and USD/JPY have produced some 5-600 pips in only a few short days.
USD trades remain flat, as the continued concerns about Greece keep EUR ( the polar opposite of USD ) in a continued state of flux/confusion.
This is not about Greece. It’s about China. It’s about global appetite for risk…and it’s about the big boys making a speedy exit with profits in hand, as The SP 500 “continues” to make lower highs and lower lows ( the definition of a down trend ).
This is certainly not over. It’s not a dip to be bought, as we’ve been on the other side of the mountain for days now.
Protect yourself, as I “remain” short risk.
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A Forex Plan Moving Forward – Risk Off
The down trend in Japanese Yen ( and subsequent rise in risk appetite ) now looks to be “officially broken”. We clearly understand the relationship here.
It would take an awful lot to imagine pairs such as AUD/JPY or CAD/JPY reversing here, and putting in new highs. Very unlikely.
I am looking to start ( in typical fashion – with single contract entries ) short positions in any number of JPY related pairs with particular focus on JPY vs AUD, NZD, CAD ( the commodity related currencies ).
In general I expect to see JPY rise…..and USD fall along side risk.
I would be wary of trades in EUR/JPY , CHF/JPY and perhaps even GBP/JPY as “if/when” USD continues to fall….the E.U related currencies will take inflows so…..bigger moves to be seen in JPY vs Commods.
Still holding USD shorts – YES.
This is pretty “macro” here everyone, as at some point you’ve got to pick a side, plan your trades and put that plan into action.
If markets continue to trade “sideways” in general well……these trades could just as easily wallow/sit in the mud as the continued “distribution” here across the top goes on.
Broad strokes have me seeing a lower low now firmly established in SP 500 suggesting we bounce, and look for the ultimate short entry ( long JPY vs Commods, Short USD against E.U currencies ) over coming days.
If the media has us waiting until Sunday for more bullshit coming out of Greece – so be it. Small entries as mentioned above can be made prior…with thought in mind of either “adding to shorts higher” come Sun/Monday…..or getting some orders in “underneath” these pairs..allowing momentum to pick us up.
I see the table set for a significant move lower in risk appetite so….the breakdown above gives you the plan across most of the major currencies “pending” this plays out,,,,and “doesn’t” just continue trading back into the range.
Have fun. Enjoy some sun. Stay out of trouble if you can help it.
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Japanese Tsunami – Big Waves On The Horizon
The idea that “the entire planet” is racing into The U.S Dollar as well U.S Equities, in the face of “waning global appetite for risk” is ridiculous. Investors don’t “seek shelter” in Twitter or Facebook – you can guarantee that.
The European stock markets (The London $FTSE as well German $DAX ) have already rolled over, putting in a solid series of lower lows and lower highs – with the Canadian $TSX following suit.
It’s obvious only a few days later, that the BOJ announcement of “even more QE” has done absolutely nothing in a “global sense” as it’s effects can only be seen via the currency pair USD/JPY and the continued “buoyancy” of U.S Stocks.
Even The Nikkei itself has given back a full – 530 points overnight – taking a nice “chunk” out of the massive spike of the two days prior.
The BOJ’s move is looking more like a “preemptive strike” as opposed to something spurring global investors to “jump back on the risk train” – and it only makes sense really.
If Japan sees a Tsunami of cheaply borrowed Yen rolling in from The Pacific, wouldn’t it make sense to get the currency as low as they possibly can “prior”? Buying themselves a little more time and space before the economy is crushed like sushi roll underfoot?
Back in the day ( before the roll out of this massive QE campaign ) Japan would openly intervene directly in currency markets with hopes of keeping The Yen at bay, and time and time again the market would “slam it right back in their face” reversing the entire move – usually within the same 24 hour period.
Perhaps this time will be no different as Japan’s QE initiative will look like a “tiny water pistol” compared to the Tsunami ( unwinding of The Carry Trade ) gathering speed in the distance.
Small trades will come and go. Winners and losers alike, but “the big trades” come in “big waves” – and that’s where the money is at.
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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
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.
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Worlds Largest Pension Fund – Buying Japanese Stocks
The Nikkei has just moved 340 points higher on rumour that Yasuhisa Shiozaki ( who has been advocating for the GPIF to reduce allocation to domestic bonds ), may be appointed the Health Minister ( so what? ) when Abe announces his new cabinet tomorrow.
The GPIF ( The Government Investment Pension Fund ) The world’s largest pension fund ( yes a Japanese fund not American ) is expected to increase purchase of Japanese shares to 20 percent of holdings and reduce domestic bonds to 40 percent.
With the market way ahead of itself here it’s the actual “timing” of said purchases that is still unknown. The fund would need to buy an additional 3.5 trillion yen of domestic stocks to reach the 20 percent target, so the “span of time these purchases would be made over” is key. The fund will announce its new asset allocations in the fall – according to GPIF investment committee chairman Yasuhiro Yonezawa.
Both Gold and the Japanese Yen got absolutely demolished overnight, with fear “once again abated” having the largest pension fund on the planet now suggest it’s ready to “step it up” in support of the ponzi we’ve all come to love.
This comes as tough news for Kong as I’ve been trying to “get long JPY” on the inevitable turn, so it remains to be seen if this will manifest as a simple “spike” or develop into something larger. My initial thoughts are “nothing can save Japan” and that this only goes further to affirm the complete and total desperation currently sweeping the land of the sinking sun.
Regardless – one has to respect that a player as large as The GPIF most certainly has the ability to “ruin your day” should they decide to go all in.
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Fukushima Exposed – Tuna With Two Heads
After years of obfuscation and, simply put, lies; TEPCO has admitted in a new report that more nuclear fuel had melted at the Fukushima nuclear reactor than previously stated. While this is dreadful news, it gets worse, as the report further confirms that despite Abe’s promises and TEPCO’s state-funded efforts to build ice-walls, it may miss an important deadline binding it to clean radioactive water stored inside the Fukushima nuclear plant.
Bloomberg reports officials commenting “we are doing everything we can do,” but it appears, that is not enough as tens of thousands of tons of toxic water are expected to remain at the site by the imposed deadline.
Get the rest of the story here or “oh I dunno” maybe start looking ito the “reality of this disaster” yourself.
You still haven’t got short Japan? EWJ ( as suggested a couple days ago ) clearly moving lower.
More here.
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USD Topping Out – Nikkei Weekly Pin Bar
The other day’s 100 pip ramp up in USD/JPY has stuck – so far.
Sitting up here at the top end of the range it’s obvious that The BOJ did everything it could “pre U.S GDP debacle” to keep the status quo and defend the line at 101.20.
Please appreciate the significance of this as…..the ultimate “breakdown” in USD/JPY is the signal / breakdown required for this entire “house of cards” to take a serious, serious blow.
The fact that currency markets have literally “stood still” for the past 48 hours as global equities take their first serious hit in months says a lot – affirming “just how desperate” the co-ordinated effort of Central Bankers ( to keep this ball in the air ) has become.
The subsequent breakdown in /ES ( SP 500 futures ) has now broken below major support that “under any normal conditions” would signal what we usually call an “intermediate decline” but again…..considering who we’re up against – I can’t get too excited looking for much further downside short of this thing “popping” higher first.
Nikkei ( as suggested the other day ) appears to have “popped and dropped” back into it’s near term range , also generating an interesting looking “pin bar” on the weekly time frame. The likely “top of wave 2” in our existing framework.
Nikkei_Weekly_Aug_01_Forex_Kong
Considering the waves of poor data that continue to flood out of Japan it’s “all but certain” that the recent ramp job was / was purely Central Bank induced, “yet again” keeping this thing afloat as long as they possibly can.
What we begin to understand here now, is just how desperate the situation is and that….more than likely the fallout will be much worse / severe than your average “garden variet” BTD ( buy the dip ) and “everything will be ok” type thing.
Trade wise – considering the massive overbought conditions of The U.S Dollar one has to consider looking long both EUR/USD as well GBP/USD here but again with caution as the “solid up trend in USD” would have this trade originally manifest as “counter trend”.
I’m having trouble imagining the U.S Fed letting USD get much further out of the basement here as every single uptick essentially drives the cost of U.S Debt higher ( being denominated in USD of course ) and “how soon we forget” – The Fed still wants to crush the currency.
For those brave enough to get out and challenge the BOJ here in coming days, I see that many of the long JPY pairs have retraced a touch and could provide for “re entry” here next week including short NZD/JPY, CAD/JPY and entry short USD/JPY up here at the top end “should we see reversal first”.
Otherwise the blatantly obvious trade here is looking at EUR, considering that if USD rolls over here and spends the next 6-8 days retracing ( or perhaps generating a much larger fall ) the biggest returns will be seen vs EU currencies.
AUD has clearly had the wind taken out of it on the “risk off” move over the past couple days but it really depends “against what” with AUD/JPY still firmly under the grasp of The BOJ.
I’ll be looking for entry long EUR/USD above 1.34 after the U.S data release here this morning, and will cover the specifics of several other currency pairs ( if it really even matters in this situation ) over the weekend.
The ponzi either goes another “final round” ( likely trading flat to upward for the rest of August / early September ) or it doesn’t.
That’s really all there is too it.
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USD/JPY – The Only Thing You Need
A bit of “make it or break it” mentality here this morning as The Nikkei has pushed higher ( with JPY now trading down to it’s “hard-line of support” ) with The U.S Dollar pushing near term highs – where it was turned back in both January and a February re-test.
This puts EUR at “its major line of support” at 1.34 as well GBP “just hanging around” the upper sloping trend line ( daily trend still very much up ) near 169.50
A significant junction to say the least, as correlations across currencies suggest “a move” is certainly pending.
Currency markets should likely make a solid move here in coming days – breaking the summer doldrums.
Transports have clearly broken below support suggesting further decline, and The Dow is now under the “previously suggested top” at 16, 950.
I’ve essentially had this boiled down to a “risk on vs risk off” mentality as of late considering all the larger geopolitical factors, coupled with continued “poor data” coming out of Japan. The Yen has been the largest driving force of this continued rally in risk, as the continued printing, then conversion to USD and purchase of U.S Equities works it’s magic. The Fed passes the buck to The Bank of Japan to do the heavy lifting.
Consider 200 billion per month in paper coming out of Japan, compared to the now “only 35-45 billion” from The Fed to put this in perspective.
JPY_Breakout_Breakdown
Japan is where the money is coming from.
A close eye on the current “range” on currency pair USD/JPY is really all you’ll need.
Break out – or breakdown?
Feel free to check out how we’re trading it at www.forexkong.net
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A Question? – For Fellow Forex Traders
You are all hotshots – I know.
So…..tell me.
As many of you have suggested “trading the fundamentals” is akin to “reading the entrails of dead animals” ( essentially suggesting that “pure technical analysis” is sufficient ) – what are your thoughts on USD/JPY?
JPY ( Japanese Yen ) being the largest contributing factor in the current and seemingly “never ending rally in risk” ( as Japan’s “printing machine” currently dwarfs that of The United States ) – why isn’t USD/JPY making “massive upside moves” along side the ridiculously manipulated run up in U.S Equities?
If currency markets where “taking the bait” wouldn’t we see USD/JPY bursting higher, then higher, and even higher alongside the current ponzi playing out in U.S Equities?
USD_JPY_July_23_2014
From a purely technical perspective the chart pattern seen above ( a descending triangle ) is extremely bearish – suggesting that the pair will “eventually break through support” and likely waterfall lower.
The Central Banks of both Japan and The Unites States are hell bent on preventing this from happening but…..would you imagine the opposite?
Risk at all time highs…but the “ultimate suggestion” of risk ( borrowing JPY at 0% and investing it in U.S Equities” in seeking yield ) hasn’t done jack shit for the past 6 months.
I invite you all to weigh in – as fellow readers can only benefit from the potencial “pissing match ” to ensue.
Perhaps a cat’s got your toungue? Or maybe you’re out in the back yard now…looking to kill one and have a good look at it’s insides – with hopes of figuring this out.
Good luck with that.
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Kong Buys – Gold And Silver Miners Galore
I’ve started a small portfolio ( actually via Kong Senior up North with his “Canadian loonies” – Hey pop!) including the following names, and harken back to a post from the “grand productive days” before all this blogging and investing got so “serious”.
MUX, ANV, EXK, LSG, AGI
Mining – Could It Be In Our Genes?
Could the ancient astronaut theory hold true?
That thousands of years ago celestial visitors came to our planet in search of materials needed for their very survival – and in realizing the difficulties in extracting these materials from the ground, developed modern man to essentially do the hard work for them? When you really think about it…..it’s really not that far off.
As a young boy I remember a hoax that played out at my elementary school. A group of the older kids had painted a bunch of small rocks with gold model paint and hid them out in the sand of the school’s playground. Once the word got out….I recall the excitement and anticipation sitting there in my tiny desk, staring at the clock, squirming in my chair, waiting for the bell to ring. “Gold! Gold! – they’ve found gold in the playground!”.
We’d trip over ourselves racing out the door – eager to be the first to lay our hands on even the smallest spec of the glorious stuff. We spent hours on our hands and knees sifting, searching for our fortunes.
In the end…….I never found a single piece.
A silly young boy indeed – but is it really any different now as adults?
Maybe mining is in our genes.
We’ll see how these little nuggets pay off here in a couple of months.
Forex Trading with Kong 