WEEKLY FOREX FORECAST: ALL FX MAJORS... Part 1This is Part 1 of the Weekly Forex Forecast.
Part 2 will follow! Look for it!
In this video, we will cover:
USD Index
EUR
GBP
AUD
CAD
NZD
CHF
JPY
Enjoy!
May profits be upon you.
J7M2024 trade ideas
volume spread analysis on JPY indexCME 6J Japanese Yen index is down very significantly for long time
Bank of Japan tell public to day that BOJ already do intervention to protect JPY not to make it drop more than this
Now based on VSA trading analysis
there are 1H candle stick show extremely high volume with small candle body
this can be interpreted that some big player absorbed the selling pressure using limit buy order
so open long position here have some edge from both BOJ intervention news + VSA analysis
Extreme volume only indicator in this trade set up is volume
please check 6J weekly volume
this is the highest volume since 2013!
and that is meaningful in technical analysis
confluent with fundamental news that Japan government try to protect JPY currency
also you can backtest on weekly chart that
every time bullish engulfing happen with volume this set up work almost every time
however I set RR ratio just 1.5 because this is still considered as counter trend trade
If USD keep strong compare with JPY
Japan will have problem import goods
Hope Japan successfully protect their currency
Hope I can make some money from this trade
JPY - Futures - 6/5/20241. JPY - Japanese Yen
COT Report: 179,144 net positions as of 04/23/24 - Yearly High
Fundamentals:
Japanese Central Bank Rates: <0.10%
Tokyo CPI (Forecast 2.2%, Actual 1.6%)
Steady Yen strengthening despite negative JPY fundamentals.
Summary:
BOJ's interest rate maintenance and USD Non-Farm Payroll data contribute to potential turning points.
Intervention risks in JPYThe 6J is the Chicago Mercantile Exchange contract for the JPY futures. We have been in a bearish wedge and probing pretty key support. Our listeners of our daily show have asked our team how close we would be to intervention from the Ministry of Finance (MOF), or intervention rhetoric from the Bank of Japan in recent weeks. Our team has explained almost daily that we should not focus on one pair (i.e. USDJPY) but more of the JPY in general.
Today, with the move of the USDJPY above the 152.00 level, the risks have increased. But the fact that the 6J has reached support and currently breaking lower, the risks have increased quite a bit for intervention from the MOF especially if this broad based moved picks up the pace lower. Key support is at the 127% extension at .006446 in the coming days, RSI is divergent so technical risks are high for a reversal too.
Daily EUR/USD Updates 3/20/24Hello Traders!
Price is still selling off as we can see. Long retail traders are mad.
YEN ICI Price IS retesting Zone Between .382% and .500%. I'm Expecting a stop hunt. Waiting for Break Above trendline of corrective wave (0.0067885) Entry on Retest.
Entry:0.0067875
SL:0.0067510
TP:0.0068595
Not trading Advice Just My Plan for the day.
Good Luck
Yen Futures: Resale of Call options 0.006850 Bearish SentimentThe targets set for the Yen on February 19th have almost been reached.
The uptrend still has a small potential to reach target number 2, but after that the Yen's downtrend will most likely continue.
This is supported by COT reports and activity in option portfolios, which were formed on February 29 (at the local minimum) on the CME exchange.
The prices of futures and volatility have increased. Stated that someone BIG and WELL INFORMED market participant is profiting from reselling 0.00685 call options without waiting for them to become ITM (in-the-money). Can you guess why?)
Japanese Yen May Face A RecoveryJapanese Yen has been very weak since start of the year, but we can see a three-wave A-B-C corrective decline on Japanese Yen Futures chart, which can be now completed by current sharp reversal up above important trendline. So, we believe that Japanese yen may now face a recovery in the upcoming days/weeks, maybe months, just be aware of short-term pullbacks.
Trend Reversal Trade On Japanese Yen4 hour downtrend is extended and reaching the 8th wave.
1 hour chart is still showing a downtrend but price is trying to break above the 50 SMA.
We saw a full trend reversal on the 15 and 5 minute trend with a clear break of structure.
I took an aggressive entry and have a target set at 2:1
Accumulation before the level, free zone after the levelAccumulation before the level, free zone after the level
JPY Index Possible Buys. I am showing a possible direction for the JPY index, meaning we can then expect some correlation from JPY involved' pairs. I see buys at demand zone on both daily and 4HR timeframe. Watch my next Post for CADJPY and other JPY based pairs for buys and sells..
Yen Futures Contracts Will it Break?Yen Futures Contracts drives the Yen pairs, any break down from consolidation could mean a collapse of the Yen! Let's see, if it does get ready Members'! Chris
A Case for 6J1!l Corrective Wave AnalysisExpanding Triangle
Rules
Most rules are the same as for contracting triangles, with these differences:
Wave C, D, and E each move beyond the end of the preceding same-directional subwave. (The result is that going forward in time, a line connecting the ends of waves B and D diverges from a line connecting the ends of waves A and C.)
Subwaves B, C, and D each retrace at least 100 percent but no more than 150 percent of the preceding subwave.
Guidelines
Most guidelines are the same as contracting triangle, with these differences:
Subwaves B. C and D usually retrace 105 to 125 percent of the preceding subwave.
No subwave has yet been observed to subdivide into a triangle.
worldcyclesinstitute.com
Bullish Shark on the Japanese Yen Futures Feb 16th ContractThere is a Bullish Shark visible on the Japanese Yen Futures contract expiring on Feb 16th 2024, there is also RSI Bullish Divergence on the 4 Hour Timeframe at this level. A higher low bounce in the JPY from here would likely result in further tightening of the Japanese carry trade, which would be bad for stock and particularly bad for REITs and Financial Institutions. Saying as though it is the Feb 16th Contract that this Harmonic has completed on, I would expect the JPY to rise sharply leading into the expiration of this contract.
Will Yen Tank to New Lows?The Japanese Yen is one of the worst performing currencies in 2024. It has weakened 5.4% against the USD.
Forces have been stacked against Yen ever since the US Federal Reserve started raising interest rates at a record pace. In sharp contrast, ultra loose monetary stance from the Bank of Japan (BoJ) resulted in wide policy rate differential of 5% between short-term interest rates in both countries, which has contributed to Yen weakness.
The Yen made a recovery in December driven by a dovish Fed and hopes of BoJ exiting its ultra-loose policy in 2024. Yen rose to levels unseen since June 2023. However, thus far in 2024, the Yen has weakened as recent developments have cemented the need to maintain current loose monetary policy in Japan.
An Earthquake that struck Japan at the start of the year caused infrastructure damage. Stimulus will be required to fix that. Inflation in Japan is retreating to BoJ’s target range rapidly. Consequently, the central bank may see no rush to start hiking rates given uncertain recovery in economic growth.
This paper describes various forces at play and establishes a hypothetical trade setup using CME Japanese Yen futures to harness gains from weakening Yen.
BOJ’s MONETARY POLICY MAY STAY LOOSER FOR LONGER
1. Aid for Earthquake Relief: On January 2nd, a severe earthquake hit near Japan's Ishikawa prefecture , causing widespread destruction, damaging over 4,000 homes. The area continues to experience aftershocks, adding to the damage. Moody’s RMS predicts insured losses from the earthquake could be between USD 3 billion and USD 6 billion.
In response, Japan's Prime Minister Fumio Kushida plans to double earthquake relief funds to USD 7 billion in the next fiscal year to aid recovery efforts. Given the economic fallout, the BoJ is likely to maintain its lenient monetary policy in the near future.
2. Cooling CPI: Japan’s most recent CPI figures showed inflation cooling to 2.6% in December from 2.8% in November. That is the lowest reading since July 2022. Core CPI, which excludes fresh food, a measure referenced by the BoJ, fell to 2.3% from 2.5%. Inflation excluding fresh food and energy was 3.7% YoY, which was also lower compared to November’s 3.8%.
The core CPI reading is just a hair above BoJ’s target range of 2%. Inflation was driven lower by decline (11.6% YoY) in energy costs. The large drop was due to base effects of high energy prices last year. Services inflation remained unchanged at 2.3% fuelled by higher wages. That is positive news for the BoJ which aims to establish sustainable domestic-demand & wage-growth driven inflation.
With wage hikes from the Shunto negotiation in March-April still undecided, the BoJ is unlikely to pre-empt the exit from loose policy. Therefore, the next two policy meetings are unlikely to lead to a policy shift.
BoJ Policy Meeting calendar ( BoJ )
FED POLICY MAY NEED TO REMAIN TIGHTER FOR LONGER
Meanwhile, concerns are plenty in the US too. Inflation rebounded in December. Core inflation remains strong. Robust retail sales suggest consumers are resilient and still spending.
Jobs data from December was healthy. Recent jobless claims points to further strength in the labour market.
Put together, the Fed will not rush to cut rates as markets expect. This is exemplified by diverging market and Fed expectations for rate path. According to CME FedWatch tool (as of 22/Jan), markets are expecting 5 rate cuts in 2024 while Federal Reserve's dot plot suggested only 3 rate cuts would take place.
Both factors, from Japan and the US together, suggest fundamental Yen weakness and these conditions are expected to persist for longer.
YEN INTERVENTION WARNING
Despite the fundamental weakness, there are risks from betting against further Yen weakening.
As the currency weakened rapidly past 148/USD, the Japanese Finance Minister, Shunichi Suzuki, stated that the government is closely watching developments in the currency markets. He stressed the importance of stability and that market movements should reflect economic fundamentals.
Likelihood of intervention remains high and its impact on the Yen has been discussed previously .
MARKET METRICS
Options market activity points to a contrasting trend. Recent open interest change in CME Group Japanese Yen options have been tilted towards higher calls signalling hopes of Yen strengthening. Overall positioning points to a similar contrary trend.
CME Group Japanese Yen options OI change between 11/Jan and 19/Jan ( QuikStrike )
Despite the recent rally, implied volatility has not spiked significantly. They remain well below the highs seen in mid-December around BoJ’s policy meeting. Moreover, options skew remains elevated from its lows observed in late-October when the sentiment around Yen was heavily bearish.
CME Japanese Yen options CVOL index and options skew ( CVOL )
HYPOTHETICAL TRADE SETUP
The BoJ is unlikely to exit its loose policy stance any time soon against the backdrop of rapidly slowing inflation and uncertain economic outlook. In the US, a rebound in inflation might delay Fed’s rate cut decision. Collectively, this points to fundamental Yen weakness.
To limit downside exposure in case of intervention by Japanese officials in currency markets, a tight stop can limit losses.
The below hypothetical trade setup suggests a short position in CME Group Japanese Yen futures expiring in March (6JH2024) that provides a 1.55x reward to risk ratio. CME Group Japanese Yen futures have maintenance margin of USD 2,600 and provide exposure to 12,500,000 Yen.
• Entry: 0.0068115
• Target: 0.0066000
• Stop Loss: 0.0069500
• Profit at Target: USD 2,643 (68115 – 66000 = 2115 pips x 1.25)
• Loss at Stop: USD 1,731 (69500 – 68115 pips = 1385 pips x 1.25)
• Reward-to-Risk: 1.55x
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
U/J Short - (E/J and G/J):: FUNDAMENTAL
1] There is a high probability that the Japanese Government will intervene after 150 (which is already done)
2] The Banks forecast on U/J for the 1st Quarter of 2024
BMO Jan 13 143
HSBC Jan 18 142
Westpac Jan 19 145
MUFG Jan 5 140
Nordea Jan 5 137
UOB Jan 5 140
Bank of America Jan 8 145
Scotiabank Dec 19 150
BNP Paribas Dec 18 145
Danske Dec 18 139
Goldman Sachs Dec 18 145
CIBC Dec 16 154
Citi Dec 7 149
Crédit Agricole Dec 6 146
SEB Dec 4 144
Morgan Stanley Nov 28 145
ING Nov 17 140
RBC Nov 13 152
Santander Oct 31 150
UniCredit Oct 16 140
ANZ Sep 29 140
:: PRICEACTION
~ Monthly below baseline and weekly retracing to baseline after a DOUBLE TOP.
~ Daily, 2 days Doji, the next candle closing bearish will be the confirmation to SELL.
~ 4H below the baseline and expected a pullback for the sell formation.
~ Closing below 147.667 and a pullback would be a GOOD SELL.
JPY Yen - Not A Fan Until We Test Lows$JPY needs to test these multiyear lows before I'm a fan of buying the yen again. We are attacking this play via GBPYJPY last 2 weeks. Giving it a rest for now - Need to test these lows!
Time for the Yen to blast offThe YEN is a flight to safety, much like Tbills. We should see a continued push into the Yen throughout the next year with a target that is roughly 20% higher.
What Next For The Yen?In Karate, offense is the best form of defence. The BoJ knows it. Japan faces a raft of economic headwinds which shows up in Yen’s performance.
The BoJ intervened strongly last year to support the currency when it skirted around current levels. Yen is hovering at those levels again. BoJ is anticipated to act. Such interventions typically mark the bottom.
This paper explores recent economic data to analyse the potential for monetary policy changes by BOJ.
JAPANESE MACROECONOMIC CONDITIONS HAMPER YEN FROM STRENGTHENING
Starting September, the Yen has trended lower relative to the USD among currency majors.
The Yen has weakened the most. As described previously , BoJ’s aims to kickstart the economy onto a high growth trajectory to exit decades of painful deflation.
Recent macroeconomic data indicates weakness. This reaffirms the need for continued loose monetary policy. However, a frail Yen poses a different type of challenge for the BoJ with higher import costs for fresh food and fuel.
This leaves the BoJ in a predicament between loose monetary policy and intervention to support the Yen. What does recent inflation, GDP, and wage data point to?
Inflation
Inflation declined M-o-M in September. CPI cooled to 2.8% falling below 3% for the first time in a year. Importantly, Japan’s producer prices are now below 2% in a sign that inflation might have peaked.
Consumer prices will fail to prevail above 4% for long with input prices moderating. The BoJ expects inflation to persist until March next year at current levels and to cool towards target rates in the following 12 months.
GDP Growth
The Japanese economy shrank 2.1% YoY in Q3. This is far below expectations of 0.6% decline and a sharp slowdown from +4.5% growth in Q2. Slow economic growth makes economic stimulus essential to sustain it.
Wages
Nominal wage growth continues to decline. Real wages are even more concerning. Wages have declined for the last 18 months when adjusted for inflation.
Next Shunto negotiations are set to complete by mid-Jan 2024 with outcome remaining uncertain. The BoJ highlighted that wage uncertainties and price-setting behaviour pose upside risk to prices.
Meanwhile, high inflation will keep impacting real wages, affecting people's ability to spend.
THE BANK OF JAPAN IS STUCK BETWEEN A ROCK AND A HARD PLACE
At the October monetary policy meeting, the BoJ announced changes to the bond yield cap. The Yield Curve Control (YCC) policy and range were kept unchanged.
However, a small modification was made to change the 1% JGB yield cap from a rigid one to a loose reference. These changes hint at BoJ setting itself up for the eventual roll-back of the YCC policy altogether.
Next BoJ policy meeting is set for December 19th. The BoJ will likely maintain stimulus and hold rates low amid feeble consumer & business spending.
The policy change will be through YCC dismantling, impacting the JGB market. It will require careful planning and deft timing.
Meanwhile, the BoJ may intervene to stem continued Yen weakness. The officials have expressed this sentiment over the last two weeks via warnings for participants shorting the Yen over the past two weeks.
Japan’s Ministry of Finance (MoF) intervened three times last year, injecting USD 68 billion to support the Yen when it was trading near 150/USD. These interventions, unannounced, led to sharp and unexpected currency moves.
Unlike previous exchange rate-based interventions, the BoJ’s current predicament revolves around volatility and public perception.
Reuters reports that if Japan aims to prevent yen appreciation, the MoF will issue short-term bills to raise Yen, which is then sold in the market to weaken the currency. Alternatively, to curb Yen depreciation, authorities will tap into Japan's FX reserves, exchanging dollars for the Yen.
In recent weeks, Japanese authorities have issued warnings and expressed readiness to intervene as the Yen continues to weaken, despite a moderating USD.
Masato Kanda, Japan's top currency official, emphasized the urgency of their judgments and the potential for intervention, resonating with rhetorics used a year ago.
MIXED SIGNALS FROM CURRENCY DERIVATIVES MARKETS
Although asset managers are not positioned as net short as they were in late-September, they increased their net short positioning (weakening Yen) last Tuesday. Similarly, leveraged funds also increased net short positioning sharply last week.
Options markets contrarily signal strength in the Yen. P/C ratio for CME Japanese Yen Options (JPU) is 0.42 implying two puts for every five calls. JPUs are quoted with the Yen as the base currency so call options express a view of the Yen strengthening.
Moreover, bullish bets have increased heavily over the past week. Specifically, nearest monthly and weekly contracts (JPZ3 and WJ4X3) show Yen strengthening in the near term. Bullish bets in December options outnumber bearish bets by three times.
Although put open interest (OI) is concentrated near current levels with the highest OI at 0.0066 (151 in USD/JPY), call OI is more spread across with a large OI at strike of 0.0069 (145 in USD/JPY) which has ballooned over the last week. This signals that options market expects Yen strengthening by next month.
Finally, implied volatility on JPU is near its lowest level since March 2022.
Source: CME CVOL
Options skew on JPU is close to one, indicating that premiums on calls and puts are equally priced. Convexity remains elevated signalling investor interest in OTM options suggesting likelihood of sharp moves ahead.
HYPOTHETICAL TRADE SETUP
Given 12-month low implied volatility, a position in JPU can yield cost-effective protection against sharp Yen moves.
Alternatively, with the anticipated stability in Japanese interest rates, a short futures position in CME Japanese Yen futures, as previously discussed in a paper , is a viable approach to capitalizing on Yen's expected weakening. We can tap into JPU to safeguard this position against unforeseen risks of yen strengthening from BoJ intervention.
Furthermore, CME offers weekly options for Japanese Yen futures, expiring from Monday through Friday of the week. This enables investors to attain short-term exposure on a more focused scale, accompanied by lower premiums compared to monthly options.
A long call option position in JPUZ3 (expiring on December 8) would benefit from a BoJ intervention.
The trade setup consists of an entry at a strike of 0.0068 (JPY 147.0588) in JPUZ3 call options. These options are at a delta of 25 and expire in 30 days providing a good trade-off between low premium and adequate exposure to the underlying.
As of settlement on November 17th, premium for these options stood at USD 245 at an implied volatility of 8.26%.
Source: CME Options Calculator
The position breaks even at 0.00682 (JPY 146.6275) and turns profitable when (a) underlying futures price increases above strike price, and/or (b) implied volatility increases.
Source: CME QuikStrike
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
JPY Futures aggressive Big deal was detectedExtremely Aggressive Yen Call Spread Placed on Nov 17. But, It is crucial to comprehend that the purchaser of a forceful spread doesn't anticipate the price reaching its target zone. Instead, he simply require strong movement towards the price zone to earn X2 the amount or more. We will monitor the participant's conduct further to grasp his intentions and exit plan from the market
We do the best research as we can to find new opportunities in the massive amount of information every day to help you make data-driven trading decision.
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all!
JPY long sentimentIn the last 3 days, the increased interest of options market participants in the 0.00685 call has been noticed. The buying is systematic, but in small volumes and with a significant time lag. Such behavior is not typical for insiders, so we are most likely dealing with professional speculators. The purchase of this share is logically justified: the volatility of the central strike is extremely low, and from a graphical point of view, speculators are counting on a correction to the liquid area of emotional buyers. At the same time, we define the level of 0.006775 as an indicator, the break of which will confirm the correctness of this sentiment. Before the break of this level, it will be extremely risky to open long positions.
****We do the best research as we can to find new opportunities in the massive amount of information every day to help you make data-driven trading decision****.
***Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all!***
