A possible scenario to look at

As traders, even if it’s not our expected outcome and actual view, we need to look at what’s in front of us and try to look forward to what could help or go wrong in our actual positions if any on board. My today’s view in the context of a stronger USD, BOJ’s repeated confirmation to want to reach their inflation target, an improved Korean peninsula situation, higher Japanese wages hopefully pushing up consumption and inflation, is that 110 will eventually break, decisively or temporary that’s an open question for a visit up to 111s at least.
BUT fact is that 110 has resisted twice now. Fibs, MA’s ,Japanese exporters, range and psychologic level players are keeping a lid on it.

Longer termers may start to look at that double top in USDJPY. 1,5 month ago a move below 105(low 104.63)  got rejected and now it’s possible the 110 undergoes the same fate. IF we see this confirmed by moving back to or below 108.80/00, I expect those longer termers to put structures in place to play the range, making it even more difficult to break either side.
in this scenario it should start to show soon via the options. Bigger strikes both ends of the 105-110 range and possibly larger barriers 104.50-104 and 110.50-111 as these players will typically put Knock Outs or Double No Touches in place to rake in premium together with placing offers and bids inside 110-105 to play the range and defend the barriers.

Again it’s not my today’s view but I just wanted to give the heads up on how bigger and longer term players approach the markets out of my banking experience. IF we see this scenario unfold, safest play is to join who we can’t fight with reversals outside the 104-111 range as if it would break , they will equally go with the trend and new adventures will start.

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