Special Focus: Japanese Yen

As a technical intraday trader, I seldom talk about fundamentals, perform any analysis or make long-term forecasts. So, here's my first published attempt at it. :-)

We've witnessed the appreciation of the JPY by more than 50% in effective terms since the start of the crisis. Naturally, many are eager to know the new administration’s stance on JPY.

Japan is not a particularly open economy; notwithstanding the significance exports have played in the last 10 years. As such, foreign exchange levels, especially in the current situation, are particularly important.

Off-late, there's been several statements by Japanese officials making clear that the Japanese government does not intend to pursue policies favouring JPY weakness and this, in a FX market looking for ‘stories’ has triggered a strong appreciation to the JPY.

However, my view is that the USD zone still seems very resilient, especially as markets for risky assets stop for breath after the significant improvement in the past six months. So, I'm in favour of a moderate depreciation of the JPY in the next six months.

My call? By year-end... EUR/JPY to reach 139.00 and USD/JPY to reach 97.00.

To support this view, I've dedicated a USD1 million sub-account to trade EUR/JPY. The 5 day results have so far been encouraging. With 3% daily at risk (USD30,000), I've managed to make 107 trades with 105 wins and only 2 losses, for a 98.13% win rate. This translates to a nett return of USD606,137.59 or 60.6% in 5 days.

Here's a look at EUR/JPY on M5. So, far... I've resisted the temptation of shorting resistance levels and instead have focussed my trades on going long at support levels. Though EUR/JPY essentially finished the week at the same level it started the week at, a 60% return on "long-only" trades is pretty encouraging.

Looking at the M15 chart, I'm reasonably comfortable that having bounced off MoS1 (129.02)... EUR/JPY should at the very least be a long to MPP (132.24) which is my 1-month target. So, I'll be buying any dips going forward with this immediate target in mind.


Sameer said...

If you could somehow check the buying volume around 130-128 from the past 4-5 months.. it would confirm your view. If the buying volume is particularly low, i would wait until 125-127 area to be long biased. But i mean with your risk of 30,000; you're on totally different level than some of us retail traders. Incredible results tho, only 2 losses. Keep it up.

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