Few days ago I brought up a subject of Japanese financial officials changing their view about the Yen. Indeed, that’s what happened, and more. Bank of Japan held an unscheduled policy meeting recently, even if it didn’t accomplish all that much. But this demonstrates just how big of a change of heart there is about JPY now. Until last week foreign exchange movements had been seen as “orderly” and “not-worrisome”. This week, however, both BoJ and other authorities are using every opportunity to talk the Yen down. Even Japanese Prime Minister Yukio Hatoyama was cited by the Nikkei newspaper as saying the currency’s strength can’t be left as it is.
I had been following this thread for a few days now, so might as well continue and see what comes out of it. Besides, trading Japanese Yen is a big part of my activities and I have to keep up with these developments. After great run JPY had last week, some weakness was expected, regardless of BoJ stance on the issue. This is happening right now, with pace of Yen decline slowing down. Probably market participants are realising that for right now it is only talk, not real action coming from Japan and they are trying to avoid intervention for as long as possible. Interventions are expensive, create additional volatility in the markets and are not guaranteed to work. I doubt we will see direct market involvement by BoJ, unless Yen makes new highs, has another round of strength.
For right now Yen pairs are moving higher and I think we are in a general area that will decide intermediate direction. Volatility is dropping, price swings are becoming smaller. This type of behavior is consistent with early stages of reversal. On intermediate term chart, 4H, I’d like to see price to take out most recent low, about 62.70, followed by a bounce above it. Any subsequent new low would be a signal to sell, very similar to Common reversal pattern, only upside down. If the price makes new high, this process will be adjusted. Taking into consideration nature of market moves at the moment, this kind of reversal could easily take 2-3 days to develop on chart of interest
Shorter time frames of Yen pairs are definitely showing an uptrend and some of them even built nice upside breakout patterns. While in principle I think JPY cross will turn down soon, hourly charts dictate buys. Can’t argue with it, so I took a long trade in GBP-JPY. Price action late Tuesday was very tight, move out of that range was very probable. I placed a buy order at 144.50, with a target of 100 pips, fairly small due to my longer term views. It was reached fast, for a decent gain. Now I have to wait and see if the price wants to turn down, and what BoJ is willing to say to prevent it.
Mike K.
Nice trade in the beast. Now, question is, what are you going to do if Yen just keep getting weaker, as it is now. Are you looking for some buys here, or waitng for reversal?
Right now I don’t see buy signals in Yen pairs on the time frames I follow in the blog. At least not of the type I’m looking for. Waiting pattern, I guess, except for small time frames.
Nothing on hourly then, something you could update on?
Well, hourly up trends are already somewhat overdone, as meassured by number of swings. You could try trading breakouts, or pull backs, but at this stage odds are not that great. I’m more selective, don’t take every conceivable trade. But good luck if you do.
[...] The Yen- which way now? | fxmadness.com fxmadness.com/2009/12/02/general/the-yen-which-way-now – view page – cached Few days ago I brought up a subject of Japanese financial officials changing their view about the Yen. Indeed, that’s what happened, and more. Bank of Japan [...]
Another bad night. My system is failing me or I am failing my system. I suspected I was not seeing the chart clearly but I was sure the pound was weak. I looked at GBP/CHF right as it started to move up and I pretended it was still moving lower, creating the picture I wanted to see. I did not see any other charts I liked so I settled and prematurely picked the wrong direction. One day I will be wise and wait.
I KNEW that sucker was a sell. Go me!
So, how did you do?
made 63 pips but at the expense of a few more. I think my whole confusion lay in the fact that I was focusing on the yen as a separate entity, having expectations, and that I forgot to think about the beast. Because I suspect that if you are in any trade with the pound, it will be affected by that pair/cross (I mix those up)
Also I was confused about the lag time. I am used to seeing big activity at midnight our time. Something was screwy about the time, as I recall. I didn’t know if that had to do with the Nikkei being closed or what. But there were some new variables I didn’t get. Was it as simple as BoJ’s meeting?
I was shocked that you got 100 pips out of that chart (GBP/JPY) because at midnight it wasn’t doing anything, if I remember correctly. The whole several days threw me.
There was activity, just nothing explosive. My trade was initiated eralier, when I was sleeping, and then it just coasted to the target. Target was too small, but since were moving kind of slow, I didn’t want to push it.
[...] was not utilize. NZD-JPY is discussed, because that’s the pair I used last as an example for general Japanese Yen direction. At that time, I was looking for another move down in JPY pairs, if certain situation took place. [...]