EURJPY - Continuation (from previous post)

Updated

(This is the continuation of the previous post - attached - which became overly long.)

Currently;
SHORT off of that "before last" Stop Hunt @150.125, with very tight stops (<12 pips and excellent R/R ratio), just below major resistance. This is a long term Short Entry attempt. (However, the main set up/position is in the GBPJPY, with superior R/R characteristics!)

Here is a close up;

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Having sold that Stop Hunt ...

... held up well, so far. Lowered the stops to a scratch - even money.

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p.s. Lowered the stops to even-money because that channel is still in effect.

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So far, the Short is holding up well ...

... now, with a +45 pip cushion. Move stops along the black line - dependent on one's aim.

Trade closed: target reached

Took some off at the Stop Hunt for +80 pips;

Now, the rest of the position is "free & clear" with an other +30 pips locked in.
(This is a long(er) term Short e.g, manage it accordingly.) Now, one has to wait for that main channel to break (@149.00) before re-loading up on it, for good.

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One is currently Short here - as explained above;

This pair is at the crossroads - whether that main channel is going to break, or not?! ... Present odds stand at 4:3 for a break (based on current positioning).

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Nice, clean channel break here ...

... opening up to the intermediate target @148.70. (Then probably a pull back to the lower channel bound before continuing to 146.70, and then finally to 144.00, the ultimate Price Target for this entire move.) Continuing with the Shorts (already +110 pips) but watch for a reaction @146.70!

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This is a massive SHORT here.

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Should one care to dampen any potential volatility in the EUR/JPY pair ...

... consider a heavy SHORT in the USDCHF - which stands on it's own!

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... and this is what I meant;

Trade closed: target reached

Picked up a quick +100 pips here ...

... just to compensate for any EURJPY anxiety ;-)

Trade active

Massive SHORT

Trade active

SHORT

Trade closed manually

FLAT, for now (+9 pips).

Trade active

This is starting to wick up here;

SHORT
(This can turn into a long-term short, anywhere here, with a minimum price target of 140.00.)

Trade closed: target reached

Whether this is gonna make that push to 160 to fill that gap?? ...

... is yet to be seen. (I wouldn't bet on it, at this point.)
FLAT, for now, and just play it as it lays.

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Nothing wild here but ...

... looking to SELL - SHORT - that Stop Hunt. (It is simply a good R/R)

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Took a quick +65 pips out of this;

FLAT (Told you it wasn't gonna be anything wild ;-)

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This is starting to run into some serious resistance here;

Tonight's Japanese inflation numbers (expected to come in strong) would be a good apropo to start looking for a turn - i.e., a short entry.

Trade active

SHORT - with very tight stops!

Trade closed: stop reached

This doesn't look like it's ready to, yet. (Turned around Long with +3 pips)

Next stop is most likely 156.60.

Trade closed: target reached

FLAT +65 pips.

This is now worth a look here (Short), especially with the Japanese inflation data, tonight. (Wait for a meaningful reversal, though!)

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("Wait for a meaningful reversal...") like this one;

SHORT (The GBPJYP Short is a better deal, though.)

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Here is a birds eye view (Quarterly);

Not surprisingly, the rate differential was exactly the same back then as it is now. (... then the financial world collapsed. Now, it is only just rapidly changing although this quarter does qualify as the second largest move, so far, for this pair.)
It is worthwhile to note that Germany - the franchiser of the EU - up to now has wiped out 27 years of economic progress in just 19 short months, just as Japan is starting to snap out of it's 3 decade long slumber. Japan is also the world's largest creditor ($3.7 Trillion), bigger than China, bigger than Germany, or any other country.

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Let's see what Machine Learning has to say about it - 12 hours ahead;

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Boom!!

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Also, the most recent Japanese inflation measures fell short of expectations.
That does not mean however, that this pair could not possibly form a top somewhere around here - and soon. More importantly, just remember:
While market tops are always a process, market bottoms are singular events!

Trade closed: target reached

Here, one is entering a previously well-charted territory ...

... where the world fell apart. (... Not that it's far from it now.)
Marking this move "complete" (+165 pips) as we are starting seriously to eyeball the exits! (I.e., looking to turn around - Short -, given the right opportunity. - Clearly not just, yet!)
Important Note;
With the PBC continuously (and increasingly, still!) dumping their Euro and Yen foreign reserves, either one of those will have an increasingly difficult time to stage a ally vs. the USD! Also, while the EU is mostly just talk now, jawboning up the Euro without any true substance, the BoJ is starting to get nervous in earnest, contemplating the Yen's purchasing power - Having to import virtually everything, in that country. Thus, in broad strokes;
1) The PBC (China) dumping the Euro -> positive for EURUSD Shorts;
1a) and the Yen -> positive for USDJPY Longs;
2) The BoJ's concern about Yen strength -> positive for USDJPY, EURJPY Shorts (i.e, Yen Longs;)
3) US economic strength + Rest of World economic decline = Safe Haven bids -> big plus for the USD & the Yen;
If one includes current on-balance volumes and present capital flows (and puts them all together in a nice but far from simple Bayesian matrix or into M.L.) ... The odds are shown to shift rapidly now for a sudden shift in Yen policies and the global "carry picture". E.g. Be prepared!!
Recent FX options action also point towards (in tangible terms) the above outlined direction, and while they couldn't be called cataclysmic just yet, there can be very little doubt about the general direction and speed.

Trade active

SHORT (Unless one wants to wait for a second hit in the PRZ? ... Which one may or may not get! ;-)

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(+65 pips into it) ... Just stay Short!

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It's a fair chance that this will be a Triple-Top now;

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Note;
Going into next month (July) expiration, 30-days out there are significant increases (almost double) in FX Yen Calls, matched with similar gains in the end-of-July Sterling 125.00 Puts, while spot cash flows point to continued Euro weakness (inline with the potential 106 target, I have pointed to, earlier).
FX options action continue to point to much increased “fears” of a (“surprise” - Really?!) BoJ tightening - as I keep advocating it being a very real possibility!! - while Euro weakness is now being accepted as a foregone conclusion.
E.g. the Yen continues to hold the potential to shock markets (in the event of which the EURJPY will bear the brunt of it!), while there is still some “disbelief” for a sub-125.00 Sterling but (“just in case”? ;-) there is continued, brisk 125 Put buying, now outstripping the short flows in the EURUSD.
E.g., If you’ve been following any of these posts then by now you should be comfortably positioned in all the right places and with room to spare! I.e.; Short all USD base pairs - EURUSD, GBPUSD, etc - and the EURJPY; (very) LONG USDCHF and company.
Most importantly, those “Yen fears” remain just that until something actually happens - normally.
HOWEVER, considering the nature of a 30-year, $3 Trillion short position, and the necessity in such an event for global markets to cover it!…That just simply is Not something that one is very likely to get a chance to waltz in, in the middle of it, to take advantage of the moves that will prompt. E.g. Be strongly advised!!

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p.s. Without any intent of beleaguering it, this is just to illustrate the above point - this was in the EURJPY;

That was the single largest Yen move (700 pips), prompted by just the hint of the BoJ "may do something" - at some future date. I.e., There, nothing really happened, yet.

Trade closed manually

If this current Stop Hunt turns out to be just that - a Stop Hunt ...

... then this could make a run back up for the 157.80s.
FLAT (+60 pips), for now and see what happens ...

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As it turns out ...

... that WAS only a Stop Hunt.

Trade active

There were a couple large(r) Yen Call purchases a couple of hours ago, at the 157.50 level (however unlikely by the BoJ, as rumors would have it).

Back where we've left off - SHORT

Trade closed: target reached

However, be careful here because it is reacting, as it should;

If you're playing this outright -(Short, no options) then this is a FLAT here, at best! (I'm getting seriously tired of updating this because at this moment there is just too much action in the Yen pairs ;-)

Comment

Talk about confluence! ...

Look at where this is sitting;

- At the bottom of the 2008, August gap (from where it collapsed);
- At the 127% extension of the up-leg, from the bottom;
- Just hit a 15 year Stop Hunt;
- At the top of a 3-drive that took it all the way up here;
- at the 161% extension of the most recent up-leg;
- (exactly) on the top of a 3 year regression channel.

Which way, do You think, this is gonna go?! ... ;-)

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... and if this works ...

... then so should this one!

Right?!

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So far ...

... this is running exactly by the numbers.

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While this continues (down) by the numbers;

... the CHFJPY is even more vulnerable after that clean, Weekly Reversal;

... especially with the much narrower (than the Euro) % differential.
Good for ~1000 pips here - SHORT

Trade closed: target reached

We're gonna start lightening up here a bit ...

on those Shorts for +380 pips profit. ... with an eye on rolling over fully into to the CHFJPY Shorts;

on any significant pull back. The newly found CHF strength represents more relative Euro weakness - versus the Franc - than additional fundamental CHF strength - which remains well off the charts, well beyond reason at this point!

Trade active

While this is only a cousin to the main pair in this thread;

the GBPJPY is getting rather toppish here, right into heavy resistance.
SHORT
p.s. FX option flows also indicate disinterest (low Vol.) in further GBP upside.

Trade active

SHORT

Trade active

So far, this looks like a final Stop Hunt - SHORT; Stops @157.24 (L.P.)

Trade active

Here is Da Plan;

Trade closed: target reached

Boom!!

FLAT, for now. +400 pips

Trade active

Whether that 800 period Ema will hold here is yet-to-be-seen. (In which case this is likely to recover to 155.00 before continuing - much! - lower.)
Keep a close eye on it here!

Trade active

Reloaded massively SHORT off of that 154.80s level.

Trade closed: target reached

Covered 2/3 of Shorts for +315 pips

Trade closed: target reached

Covered the remainder of those shorts for a net total haul of +701 pips, for the day (night). (This included the EURJPY profits as the major component (42%) of our own Yen-basket.)

Trade active

SHORT

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It looks like ...

... this may make an other run for that 157.50 level.

Trade closed: target reached

Yes, it did make it up there ;-)

SHORT

Comment

Watch for that Stop Hunt here;

Trade active

This is likely heade back down to 155.00;

SHORT

Comment

This is rapidly becoming a "Widening Top" here;

Also, while the BoJ's previous attempts of jaw-boning up the Yen mostly failed, one ought to be mindful at this point that "surprise" direct BoJ interventions in support of the Yen would not be surprising at all! - As a matter of fact, those should be anticipated.

Not surprisingly, the DAX is displaying a very similar pattern to the EURJPY;

Trade active

Just a gentle reminder;

There are not only substantial technical hurdles to overcome here in any further upside attempts but also these are BoJ intervention levels!
Meaning; Unlike the BoJ's earlier attempts to jaw-bone up the Yen (which were mostly ineffective), here the BoJ is believably prepared to intervene directly in support of the Yen.

Trade active

SHORT

Nemo_Confidat

Related publications

EUR/JPY - Short; SELL right here!

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