2024/11/22
Daily 4XSetUps - No Big Moves This Week, Unlike In The EURUSD
“boj interest rate cut expectations appear to be depressing usdjpy!
is this just a construction site on the way to new heights next month?”
154.692 USDJPY : 2024/11/22 - last price action
149.775 USDJPY : 2024/08/02 - High Of Panicked Selloff
141.682 USDJPY : 2024/08/05 - Low Of Panicked Selloff
This price action is important, at least in my opinion, because share prices had already fallen on this Friday, after the publication of the monthly US labor market figures. And the sell-off accelerated on the following Monday, both in the
USDJPY and/or on Wall Street, in the US stock markets DJIA & 
SP500 & 
IXIC incl. 
NDX . The Japanese stock market 
NI225 suffered its worst point loss ever on Monday - and the largest percentage decline since 1987. And fell as much as -12% on Monday, August 5, 2024, before recovering most of the losses on Tuesday. US indices also fell more than average on Monday, with the SP500 and IXIC closing around 3% lower. The British 
UKX and the European leading index 
SXXP each fell by 2%. And volatility indicators like the VIX were, at the time, at levels last seen during the pandemic sell-off in 2020. What happened on ths botched ays, in early August 2024? For better or worse, traders and/or investors were forced to close their derivative positions due to the US labor market data, as the USDJPY exchange rate pair continued to accelerate its downward trend from more than 160 USDJPY, which had started since July 2024. And in retrospect, this above-average fast and low price action in the USDJPY was more or less the main reason for these distortions - because the price action, as we now experience every day, is usually not that big. On the contrary - usually. However, the key to the market turbulence was and still is to be found in the monetary policy of the FED and the BOJ. After all, the circumstances that supported the record highs of the global markets this year 2024 were the high interest rates in the USA (5.25% - 5.50) and/or the low interest rates in Japan (0.25% after the interest rate hike last week before, back than in early August 2024). Traders and/or Investors were and are still able to borrow in yen, which even until the last week before the w trend reversal formation, we had in USDJPY multi-decade lows, until the start of July 2024 incl. in higher-performing dollar assets such as technology stocks NDX and/or US10Y U.S. bonds. This process, which is called "carry trade" plunged during these two days - Friday, the 2nd 2024 and/or Monday, the 5th 2024 - on fears about the U.S. economy. And so, at the beginning of August 2024, expectations changed that the US Federal Reserve would cut interest rates faster and deeper than the majority of traders and/or investors previously thought - to support the US economy. And what happens in such scenarios if you get caught on the wrong foot in terms of monetary policy? Right - the majority's expectations change! And what about the price action? Correct - that's right also. The price action also rotates! How long? How high? How low? I don`t know! But I know that, based on the latest data from the US economy, the US economy is not headed into a recession. Almost the opposite - the US economy is growing out of the self-organized US stagflation, into which it had politically organized itself with the previous Biden & Harris government of the US Democrats. Therefore, Bidenomics was nothing more than a costly green domestic adventure and/or a green militant foreign adventure by Democrats, under the guise of liberal freedom. So that we all now find ourselves at least after four years - Biden & Harris - but with less money, less purchasing power, in our private wallets. What doesn't just only happen to Americans, much more in most countries in our so-called West. And why, for better or worse, Trump was re-elected if I'm not mistaken.
“I saw that to do exceptionally well you have to push your limits and that, if you push your limits, you will crash and it will hurt a lot. You will think you have failed—but that won’t be true unless you give up.”
Ray Dalio
The Governor of the Bank of Japan (BOJ), Kazuo Ueda, put a BOJ key interest rate increase in December 2024 on the table in a speech on Monday, at the beginning of the week. Currently, the BOJ target rate for unsecured overnight funds is just 0.25%. According to the governor, the economy in Japan is "moving towards sustained inflation driven by wage increases. Therefore, the Bank of Japan will soon have to reduce the degree of expansion of its monetary policy. There are many uncertainties, such as the uncertainties about the shape of the US Economic policy under a Trump administration does not mean that the BOJ will wait until all uncertainties are over." It almost seems that many traders and/or investors have switched to the bear side in the short term in the last few days due to possible further interest rate hikes by the BOJ, because they expect a lower USDJPY in the medium term. Is that so? Yes, if we fall back into the sub-150
USDJPY scenario. But i don`t think so - at least not today. However, if the price action stays above that, I continue to assume a "carry trade" in the USDJPY - that`s why this long 4XSetUp. "Inflation in Japan continues to be on a continuous downward trend, which is repeatedly supported by special factors such as the current development of rice prices, but ultimately shows little sign of leveling off above 2%. So there is something from this side too "There remain few arguments for the Bank of Japan to raise key interest rates over the next few months." If you believe Commerzbank Analysts like Volkmar Baur, for example. And that's what I do in this case. Which should then become sufficiently clear by next year 2025 at the latest and will continue to weigh on the JPY. Which is why we let this long 4XSetUp continue to run accordingly.-----------------------------------------------------------
180.000 USDJPY : 2025/09/30 - target price
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154.692 USDJPY : 2024/11/22 - last price action
152.604 USDJPY : 2024/11/08 - entry
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140.000 USDJPY : 2024/11/08 - stop price
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With best wishes
and with good intentions!
Aaron
“daily 4XSetUps - …” is pure information material!
By trying to give you even more information about some trading capabilities to trade and/or invest in some securities. This post is not a call to action - it only provides information. You decide (not) to decide. Even if I am writing daily 4XSetUps with concrete entry prices, target prices and/or also stop prices! It is like it is - like I said; You decide to respond to the analysis I just formulated to buy, to sell, or to do nothing! More information about my approaches to investing in something specific or just trading it, or even just describing it, can be found in the daily "Another 48h - DXY ...! Analysis Post. Where I try to track the price action in
DXY every day so that we learn something new daily.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.