The previous USDJPY thread became too long to remain practical hence, this new thread for the USDJPY.
Previous thread summary ----------------------------------- Calendar days: 96 Net profit: (USDJPY only) +1073 pips (including the currency hedge adjustments in support of Nikkei long positions - +1132% Net) Max risk; 0.71% of capital; Max draw-down: -0.43% Number of trades: 52 (including hedge adjustments) Average R/R: 1:10.25 (Exclusive of hedge adjustments) -----------------------------------
Here is the Daily;
Currently: FLAT -> Long Bias.
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Trade closed: target reached
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(+42 pips) FLAT, for now
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Note; Going into next month (July) expiration, 30-days out there are significant increases (almost double) in FX Yen Calls, matched with similar gains in the end-of-July Sterling 125.00 Puts, while spot cash flows point to continued Euro weakness (inline with the potential 106 target, I have pointed to, earlier). FX options action continue to point to much increased “fears” of a (“surprise” - Really?!) BoJ tightening - as I keep advocating it being a very real possibility!! - while Euro weakness is now being accepted as a foregone conclusion. E.g. the Yen continues to hold the potential to shock markets (in the event of which the EURJPY will bear the brunt of it!), while there is still some “disbelief” for a sub-125.00 Sterling but (“just in case”? ;-) there is continued, brisk 125 Put buying, now outstripping the short flows in the EURUSD. E.g., If you’ve been following any of these posts then by now you should be comfortably positioned in all the right places and with room to spare! I.e.; Short all USD base pairs - EURUSD, GBPUSD, etc - and the EURJPY; (very) LONG USDCHF and company. Most importantly, those “Yen fears” remain just that until something actually happens - normally. HOWEVER, considering the nature of a 30-year, $3 Trillion short position, and the necessity in such an event for global markets to cover it!…That just simply is Not something that one is very likely to get a chance to waltz in, in the middle of it, to take advantage of the moves that will prompt. E.g. Be strongly advised!!
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p.s. Without any intent of beleaguering it, this is just to illustrate the above point - this was in the EURJPY; That was the single largest Yen move (700 pips), prompted by just the hint of the BoJ "may do something" - at some future date. I.e., There, nothing really happened, yet.
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This is just a gentle reminder where we are, at present,... ... and that now would be a good time to inform ourselves as to the location of the various exits. (within 60 pips.) While the EURJPY Short remains the focus nevertheless, this pair is also exposed to any potential BoJ move!
Trade closed: target reached
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Having tightened up the Stops here, considerably, on this most recent trade ... ... it is now completed - for all practical purposes -, locking in +480 pips. (Not counting any of the +1200 pips which was strictly part of that ginormous Nikkei position/hedge.)
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There is clearly a potential here for a push higher;
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This is probably going to get pushed back up here because A) The PBC (China) keeps dumping the Yen; B) The calls are still relatively cheap (although, ever less so) thus, everybone keeps dumping the spot (cash) against them. In any case, this is not the place to be short now!
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SHORT
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This is likely to continue to come down, very little doubt about it, however ... there is now over $3 Billion pushing against that 144.00 level for two days of options expiration! We took our +100 pips and FLAT, for now, until tomorrow - or if something gives here sooner ...
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Having switched from the outright Shorts from the USDJPY, to Shorts in the EURJPY & CHFJPY, we did slightly worse (+385 pips profit vs. the potential 440 pips here.) than if we'd just stayed with the outright Shorts here. As this pair is now clearly working on a Monthly reversal; .... there is very little doubt that this remains an aggressive SHORT Furthermore, upon more detailed examination of the USD's situation, it became clear that the US Dollar is in substantially more, imminent trouble than previously thought! (Due to the Fed.'s sustained and utterly deranged "policy actions".) Making this is a "trap door situation" here with declines expected to be sudden and violent!
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Visualization of the BoJ's interest rate policy;
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Lightened up (~1/3) here for +210 pips.
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Chances are ...
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SHORT
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A fast break here back to the 142.75-143.00 range would be significant because, aside from knocking out $4 billion in options (10 am EST), there is an additional ~$2 billion of gamma purchases ready to jump in!
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I know it's hard to tell from this particular 2-D perspective but ... ... it also happens to be a full wave, perfectly translated (rotated & scaled -> e^(2^1/(1-dP)). Let's see what happens ...
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LONG
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Just something to watch out for;
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... and IFF the above worked out as projected, then ... that would complete a "Hanging Man" on the Weekly chart. (Definitely bearish)
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SHORT - Not the most overvalued Yen cross, nevertheless ...
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Last Friday's action does Not look good for the shorts. LONG, for now.
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Here is the full picture;
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At the very minimum, do Not sell into support!! LONG
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FLAT] - +72 pips.
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Is this where one goes: Told you so? ... ;-)
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That inverse H & S did get the full extension, exactly! Chances are, this is the turn here - down. NOT the best of the Yen pairs to short, this being the most fairly valued of them all.
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This looks like ... ... it's drifting out of it's channel, coming up from 140.00. While this is still Not the best "Long Yen" pair, nevertheless, this is rolling over by all measures.
p.s. This thread is getting overly looong here. Probably it will be time to start a new one, soon.
Great one, you are doing good. How is your average position size according to your balance (%)? Take care
Nemo_Confidat
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@Divergencify, Try to stay under 20% (... and never succeed ;-), seemingly averaging ~28% over the years. But that's just so happens because at the end of the day, it is the Risk/Reward I care about, including some Beta and Theta. (Occasionally been as high as 1400%, beyond "fully levered", most recent case being those Nikkei longs.;-) A lot depends on liquidity, including the options. (If Lumber weren't de-listed recently I'd probably be there, once again, with limit bets, right about now! ;-) In short, "... and when you see it, you bet the farm!" - in Stanley Druckenmiller-esq fashion. (3 of the trades accounting for 81% of all the profits, going back to Day One.)
Divergencify
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You seems to be mature trader, I bet you know what you are doing. Great charting, I would bet a farm for you. take care.
Take care