No real bounce for a week now
Ever since the BOJ watchers started to see signals, entered the weekly and the daily Ichimoku clouds, USDJPY has difficulties to hold on to any gains. Today”s comments by Suzuki to be continuing the easing but possibly changing the interest rate targets in the process of moving towards 2% inflation have not changed the picture and BOJ’s JGB operations are hinting at declining purchases.
The USDJPY downside is now getting increasingly protected by MA’s and fib’s . Last night’s opening bounce saw the 100 and 200 dma , respectively at 111.67 and 111.74 cap the recovery. Medium term shorts can hide behind the 38.2% fibo of the September-November rally at 111.91, short termers already have 111.20 (today’s afternoon recovery blip) and 111.45 descending trendiness to tell the immediate story. NK’s detected moves towards another missile launch are adding a element of risk off to the picture , which only re-inforces the tops. Note EURJPY and EURCHF have taken a small beating as t news came out.
The bottom of the daily cloud hasn’t moved for the past week, today smalls risen to around 110.55. That is the short term objective with a station @110.80 in between. Next line in the sand , and a huge one is 110.
Lots of rumours are flying around about huge barriers there, it’s going to be some level. Especially that Japanese investors have said they would be interested to buy foreign assets unhedged under 110.
We can expect very big activity 110.00/30 to start with and anything under there. If the barriers are triggers,knock ins for big accounts , expect big demand ahead and around. If they are corporate related knock outs or protection for huge longs , there may be a fierce stop loss run if 110 breaks. Be aware anyway of possible big battles or swings at the level.
I will remain short for now with a stop above 111.45, will take a fair percentage of the position off at the bottom of the cloud and let some run for the 110 test.