Up in 2, down in 15. Solve my enigma.
Buying GJ is the best available scenario, but finding the right entry price could take multiple tries. Here's why this setup is the best scenario:
Risk appetite:
Global recovery is expanding day after day. There is more optimism than incertitude in developed countries, including the US. When the situation is good and there is no new tension or negative situations, investors do not need to secure their money in safe haven and they have a growing appetite for risk.
Pound is considered a risk-asset
Yen is considered a safe-haven.
If investors have a growing appetite for risk, they will gradually move their money out of their safe-haven currencies (sell yen, chf & gold) and gradually put their money into risk assets (buy gbp, cad, aud, nzd, usoil). So if they sell the Yen to buy the Pound, why should we not buy GJ?
Fundamentals:
Pound strong:
Almost everything is positive in the UK except the fact that there is still new covid 19 cases. But it doesn't really affect my bias for the moment as those new cases are not relevant yet. Vaccine roll out is very fast and a big part of the population is fully vaccinated. Keep in mind that the pandemic is not over yet even with positive news and development Construction sector is booming. Housing market is expanding. Labour market is expanding. Rate hike is expected next year.
Yen weak:
Pandemic in Japan is still not in control, if not out of control. State of emergency imposed in the biggest regions like Tokyo. Olympics this year might still be cancelled. BoJ is very bearish so there is a considerable monetary policies divergence between Japan and other countries. Other countries are talking about rate hike dates while the BoJ never even mentioned it yet. Vaccine roll out is very very slow. Services and Composite PMIs are both in contraction and in negative territories for the month of June. It shows a slowdown in businesses and a contracting employment rate. According to the BoJ, the pandemic's impact is still heavy on the economic outlook in Japan.
Market sentiment:
Institutions are bullish on GJ, obviously. When are they going to buy again? When retail noobs will sell. When will they sell? When price will break under 152.30. Last time institutions created a new impulsive move to the upside, their initial buying price was approx 151.50. This is where we enter.
Tip of the day:
When a trade is opened, close your charts and enjoy your day, stress free. Put alerts on key levels while your positions are running, and only open your charts if those alerts are activated. Then you will manage your position according to your plan. Otherwise, enjoy your day.
Risk appetite:
Global recovery is expanding day after day. There is more optimism than incertitude in developed countries, including the US. When the situation is good and there is no new tension or negative situations, investors do not need to secure their money in safe haven and they have a growing appetite for risk.
Pound is considered a risk-asset
Yen is considered a safe-haven.
If investors have a growing appetite for risk, they will gradually move their money out of their safe-haven currencies (sell yen, chf & gold) and gradually put their money into risk assets (buy gbp, cad, aud, nzd, usoil). So if they sell the Yen to buy the Pound, why should we not buy GJ?
Fundamentals:
Pound strong:
Almost everything is positive in the UK except the fact that there is still new covid 19 cases. But it doesn't really affect my bias for the moment as those new cases are not relevant yet. Vaccine roll out is very fast and a big part of the population is fully vaccinated. Keep in mind that the pandemic is not over yet even with positive news and development Construction sector is booming. Housing market is expanding. Labour market is expanding. Rate hike is expected next year.
Yen weak:
Pandemic in Japan is still not in control, if not out of control. State of emergency imposed in the biggest regions like Tokyo. Olympics this year might still be cancelled. BoJ is very bearish so there is a considerable monetary policies divergence between Japan and other countries. Other countries are talking about rate hike dates while the BoJ never even mentioned it yet. Vaccine roll out is very very slow. Services and Composite PMIs are both in contraction and in negative territories for the month of June. It shows a slowdown in businesses and a contracting employment rate. According to the BoJ, the pandemic's impact is still heavy on the economic outlook in Japan.
Market sentiment:
Institutions are bullish on GJ, obviously. When are they going to buy again? When retail noobs will sell. When will they sell? When price will break under 152.30. Last time institutions created a new impulsive move to the upside, their initial buying price was approx 151.50. This is where we enter.
Tip of the day:
When a trade is opened, close your charts and enjoy your day, stress free. Put alerts on key levels while your positions are running, and only open your charts if those alerts are activated. Then you will manage your position according to your plan. Otherwise, enjoy your day.