Japanese Yen has been putting on quite a show , with wild swings daily, perhaps even intraday. Since late last week we had one huge day after another, seemingly changing direction every 24 hours, too. I know, it only seems like it, after all the moves last 2 days or so. Not that it makes all that much difference, if you happen to be on the wrong side of these gyrations. The beast, for one, fell 700 pips in last 2 days, only to recover 350 pips inside last 8 hours. This is big. Not on par with year’s end madness, but big enough to make or break an account.

There was no fundamental developments to justify this volatility. Bank of Japan had its meeting, which didn’t produce anything new and this about sums it up. On the technical side, however, Yen was at crossroads, or important level, from which next major move will unfold. So far, market is acting in an undecided manner as to what is next. The clues which are revealed appear powerful only to be overridden by next development. Let’s make no mistake, this is difficult trading environment by anybody’s standard.

I had few positive Yen trades yesterday, when JPY pairs were being sold. Day ended with me going long GBP-JPY, being long term Yen bear. Besides, at that time it looked like the prevailing short term trade was overextended and due for pause. But that’s all what happened- the pause, and as soon as Tokyo opened, another spike took place. Trade was closed for a loss of 61 pips and I left it alone until Europe opened, still looking for a long position. After all, reasonable targets to the downside for JPY crosses were overshot and the last move down at just before London went on line was an exhausting move.

Entry was during first hour of London session at 156.40. Once the move was under way, it didn’t want to stop. I closed half of position just before expected resistance of 158.40, needed to see how the market would react there. It didn’t, simply kept going north. Eventually trade was was covered at 159.28. I think that markets will slow down here, ahead of FED rate announcement. And I don’t feel like finding out the hard way what the reaction is going to be.

Another Yen trade discussed yesterday was CAD-JPY. I shorted it with respectable results. This cross also just kept on falling. Situation was compounded by additional Canadian Dollar weakness, so it created conditions very similar to GBP-JPY.

I was a little more patient and waited till the close of that hourly candle before entering. Here, when the price arrived at the 87.35, it just ran right through and I held on to the entire position. It was closed at the same time as GBP-JPY trade for 218 pips.
In spite of good results, these were not easy trades. I’m having hard time grasping which time frame to go by. For example, 1H chart indicates return to an uptrend mode. We should have a little pull back and move up. However, intermediate, 4H, charts dictate that today’s move is only a correction to preceding sell off, and another swing down could start about now. On the other hand, speed of what happened today also could suggest that major trend is overpowering intermediate one and we will see new highs soon. With FED announcement in couple of hours, this is even more confusing.  So, I’m leaving it alone for a day, with no new trades and analysis. Perhaps by this time tomorrow I’ll be able to put couple of thoughts together on the subject.

As promised yesterday, here is EUR-CHF trade from earlier in the week. I closed it yesterday for 38 pips loss. There will be more buys in CHF pairs in the future. Hopefully, with better results.
Something that came up in comments. For last few weeks I had been tracking EUR-CAD, looking for CAD weakness. One good trade happened last week, in NFP report, and I was supposed keep an eye for more trades there. One good set up happened on Monday, but after I wrote a post. Everything happened very fast, so it was not posted, although I took the trade.  This is a chart of EUR-CAD from yesterday, after it was closed.

Today, for a change, Canadian Dollar was much stronger. At any rate, I’m going to wait with any more trades here, see what develops. I’m taking a short break, of sorts, see if something happens after FOMC meeting. As mentioned above, I’ll try to present some opinions about Yen pairs in the next post.

Mike K.