BullMarkets

USD JPY - Another potential huge short swing trade

Short
FX:USDJPY   U.S. Dollar / Japanese Yen
Another potential JPY swing trade. As discussed in my previous idea USD JPY was strongly rejected at the resistance line and has been making a move south since. Now is a good time to enter after the rejection at the resistance level and the seeming continuation candle that is currently forming. As with all JPY pairs be prepared for this to drop very quickly when it does. Again it may be worth entering and using a hedge buy position as your stop loss as this downward trend is very strong and not likely to change any time soon so you can hedge in and out whenever there are pullbacks/retracements to limit your risk but the overall trajectory is down so you want to stay in this one for the longer term.

I expect USD JPY to eventually hit 100 in the next 1.5/2 months so now is a good time to get your short positions in place to profit from this movement. However as with the flash crash of last week I expect the pullback to be hard once it reaches this price level and USD JPY will be the chart to watch for the right time to exit all open JPY trades. It may be safer to get out at ~101 however if you know what you are doing and know when to spot the exit you should be able to squeeze a bit more profit from this trade. You can also look to using buy orders as a hedging strategy however if you have multiple pairs open then its safer to use a hotkey to close all positions as when the buyers come in they will come in hard. If you really know what you are doing you can line up your hedge however this is more risky as it's more uncertain although it does give you the opportunity to profit further if the USD JPY continues to sub 100 levels as seen between 2010-2012 (75-85 USD/JPY ).

I will be publishing some more ideas about the US indices that I trade and what I expect to happen to them however they are closely (negatively) correlated to the strength of the JPY in my opinion. The JPY has been seen as a safe haven asset (hence the flash crash last week as buyers rushed in) and the BOJ have openly stated that they have no further stimulus to keep the currency within a specific range since they have exhausted these tactics in 2017 (please see this link). The JPY has a long way to fall and is a great trade to get into in terms of a swing trade. It has very strong momentum and a very limited upside risk which can be hedged, this trade seems more a question of how long it will take to play out as it largely depends on other macroeconomic factors as to the pace of which this can happen. That said, of course I could be wrong!

Note, I currently have short positions on all JPY pairs as I believe they will all perform in a similar manner as we saw with the flash crash last week. That said I am not going to create ideas for all currency pairs as they will all be similar as with the USD JPY and EUR JPY analyses I have done however would recommend others to do their own research into this and to enter if you agree with my analysis.

If you like this analysis please give me a thumbs up and please feel free to comment as I am passionate about sharing ideas with other traders.

Happy trading everyone!

Alex
Trade active: Update: I have had to hedge all of my JPY short positions for now. The US stock market has had 5 good days in a row and is closely correlated with the strength of the JPY. I expect the US market to start tanking again next week and with that we should see the JPY strengthen and these positions start to play out favourably.