trading JPY

USD Topping Out – Nikkei Weekly Pin Bar

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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

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.

USD/JPY – The Only Thing You Need

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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

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

A Question? – For Fellow Forex Traders

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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

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.

 

Kong Buys – Gold And Silver Miners Galore

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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.

 

USD/JPY – A Pair You Can Learn From

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We’ve discussed how important this pair is with respect to it’s “drive in equity markets” ( with JPY being sold/borrowed then converted to USD in order to purchase equities ) and it’s interesting to note that:

Regardless of whatever fluctuations we’ve now seen around Yellen’s “slightly more hawkish” comments….USD/JPY refuses to break higher thru the downward sloping trend line that has contained it for so long.

What would appear as “USD strength across the board” really only manifests as a couple pips rise in USD/JPY.

This is because strength in JPY is even GREATER. With both currencies taking inflows only JPY taking MORE creating a net result of USD/JPY falling “lower”.

This may appear counter intuitive as one might imagine “well USD is going higher….this pair should also be going higher right?” WRONG.

Understanding the fundamentals behind this pairs movement can tell you a lot about market’s appetite for risk as “USD will be converted BACK to YEN as U.S equities are sold.

A stronger Yen correlates to “weaker U.S Equities” near 95%.

Something to add to your toolbox if  it’s not already in there.

I’m adding short USD/JPY here at 101.63

Japan To Raise Sales Tax – Consumers To Slow

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Brilliance out of Japan as we see the country’s standard “sales tax” raised from 5% to a staggering 8% here for the beginning of April.

This is very likely going to cause a considerable downturn in consumer spending for the coming quarter as the BOJ finds itself “ounce again” in a very precarious position.

In April 1997, when the government last raised the sales tax, to 5% from 3%, consumption took a dive and along with the effects of the Asian financial crisis, pushed Japan into deflation and a recession that lasted more than 18 months.

Now after 16 months of printing money like there’s no tomorrow, an increase in sales tax hardly sounds like part of a “cohesive plan” but this is not at all uncommon in Japanese central planning.

It’s one step forward ( if you consider rampant currency devaluation a step forward ) and two steps back as consumers tighten their belts and plan to cut back on spending.

We’ll keep a watchful eye on the Nikkei as always, along with those pesky JPY pairs that still refuse to budge.

 

 

Central Banks Salivating – Is It War Time Yet?

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Well….It didn’t take long for one of those “black swans” to swim by, as not only has Russia “invaded” Ukraine ( yes, yes I know only Crimea where the population is primarily Russian anyway ) but Ukraine has also order “full military mobilization” in response.

With Forex Markets opening in just a few short hours it will be interesting to see if there’s any reaction to the news, as “the threat of war” would generally have investors looking for safety.

Obviously it’s far too soon to tell…but purely for interests sake, I myself am very curious to see if “even this” could possibly slow the advance of U.S Equities but again….far too soon to tell.

I’ll keep a close watch on the Japanese Yen (JPY) obviously as the first signs of “fear” will be seen with JPY rising.

Keep in mind that Central Banks absolutely “loooooove” wars, as they present governments with the need to borrow “even more money” than the copious already “being borrowed”.

Again….all that borrowing from the privately owned Fed…..”with interest”.

Is it war time yet?

All Eyes On Nikkei – A Lower High?

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The new high attained by The SP 500 this morning correlates well with a “lower high” area on the Japanese Nikkei right here around the 15,100 level, as well with the U.S Dollar “again” testing the 80.20 level in $DXY.

As we all watch our own specific indicators / indices to get a better read on “where things are at” in a general sense, it’s my thinking that these things line up quite nicely, suggesting we’ve come into a solid area of resistance/support.

Should the U.S Dollar “finally” make a decent move upward, as well the Nikkei put in a “swing high” here (and create a “lower high”) we’d likely see this move retraced, as well perhaps – find some clarity in the medium term direction.

A move lower in Nikkei would suggest “risk off” as well a higher Yen/JPY and likely ( although these days…you never know for sure ) even a higher U.S Dollar so I’m far more interested in activity “over seas” this evening then I am in today’s “usual wash / rinse / repeat”.

Keep your eyes on Nikkei.

…hey that rhymes.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

 

Forex Trade Ideas – Wednesday, February 19

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Sitting through an additional 4 or 5 full days holding a couple of small “long USD” trades, I’ve made the move here in the early morning to not only add to these – but pick up a few more.

Currently I’m holding:

long USD/CAD, as well short NZD/USD and AUD/USD

I’ve also added a small “face ripper position” in long EUR/NZD ( however bizarre you may think that is) at 164.83

I’m holding tight for the EU type currencies ( EUR; GBP and CHF ) as I’d like to see a more “convincing” move but both GBP and EUR are starting to show signs of exhaustion.

As well nearly ALL the JPY pairs are currently sitting at levels where a decent short position “could” be initiated but I’m still going to “tread lightly here” as these trades would suggest a further “risk off move”……and we know how that goes here as of late. The U.S Dollar looks painfully close to making a turn, but again we’ve got “Thursday” ahead – so in all honesty, not looking for too much action here today.

I’ve had little to say as of late, as I’ve not been actively trading but (as it’s my mandate) I must continue to push for profits as I go through alot of bamboo chutes, and of course don’t mind a good cold beer on the beach once in a while.

Reversal Across The Board – USD And JPY Back In Demand

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It’s a funny thing really.

You can make light of a particular currency pair’s price level (such as AUD/JPY yesterday afternoon), as well point out its general connection / relationship / correlation with “risk appetite”, and BAM!

Perhaps it’s a touch too early to say, but I’m seeing reversal’s in just about every single pair I track with respect to a reversal in “risk appetite” – with both USD as well JPY showing strength here overnight.

Did I need to wake up and check SP futures? or perhaps tune into my local financial news this morning to get an idea of where U.S stocks may be headed here today? Nope.

Obviously I’m short AUD/JPY from yesterday, and will be adding a couple more long JPY ideas here today. The long USD’s I’ve got will be added to as well.

I can’t imagine another “triple digit gain” here in the U.S today, as this counter trend rally peters out.

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Forex_Kong_Face_Book