Comparing BoJ interventions and Anticipating Future OnesJapan's PM Kishida claims, he cannot tolerate excessive FX moves by speculation. But given the circumstances of the message, I understand 'speculation' as an excess of supply and lack of demand. Anyway, I will not argue with the correctness of his wording, political or otherwise, and will just compare the similarities.
► The interventions started after breaking 145 and 150 (151) price levels respectively.
► First, the levels were gently grazed by a candle which later becomes huge doji with above-average volumes closing below such price level. This is likely an anticipatory price action and not a part of the intervention.
► After the price breaks above the key levels for the second time, it stays there for at least an hour into either London or New York session before the intervention starts.
► Both interventions took the price down roughly 3.4% in less than 90 minutes. The low of either intervention was never breached.
► It is likely a mere coincidence, but both interventions were conducted on the 22nd and 21st day of the month. What may be less of a coincidence is that both of them took place in the latter part of the week. This suggests some planning, not just reacting to the level.
► I would argue that the trigger level of the second intervention was not 150 but 151. If that was the case, no key session has been allowed to close above a trigger level.
► Lastly, I would like to point out that the first intervention took the markets off-guard. Not the second one. Raiders, me-included, actively bought the dip not allowing the bottom to be revisited at all.
Bank of Japan is expected to continue intervening until it is forced to change its interest policies. Unfortunately for Japan with its 238 Debt to GDP ratio, higher interest rates may be extremely painful, so it will attempt to solve its large problems with a small plaster and hope for the best. In the meanwhile, Japanese people will pay a large and increasing sum for the imports that used to be cheap.
I think this is a lesson for countries that did not board a debt spiral. Don't! All debts have to be paid including the state debt. But with states, the due date may be postponed till future generations. These future generations did not approve any loans to spend on populist policies, so indebting your country is, in my opinion, a theft from future generations.
As individual traders, we didn't create these troubles for Japan and can't stop them either, so we may as well take some profits. The first interventions knocked me out of my fresh long positions, but I used the other as an entry opportunity and boarded soon after the low was created. Even if it turns out unsuccessful, I think it is worth a potential upside potential.
It is hard to predict the next levels of the intervention will take place from. Miyamoto Musashi, one of the greatest swordsmen of Japan, once said that in battle, you may do the same thing once, twice, but never three times. Hence, none of the similarities may be relevant. But it is central bankers with tied-up hands we are dealing with, so I suggest looking for some of the mentioned parameters. Namely - a pinbar, round levels such as 155, 160, 17th Thursday, 18th Friday, and the following week, and bottoms in the aftermath.
Good luck! Long live Sauron!
Intervention
The If, When, How of the BoJ interventionAs the Yen continues to weaken, the market consensus is that the BoJ is most likely to intervene when the price hits the round number level of 150.
Understanding the previous time the BoJ intervened (non stealth) on 22nd September 2022, there are a few learning points to note:
- The market consensus price level then was 145. However, the BoJ intervened only when the USDJPY climbed to reach 145.90. ( Noteworthy : A hard and fast number probably isn't what the BoJ is paying attention to, OR market consensus is generally wrong)
- The BoJ is deemed to have intervened (stealth) twice more since the 22nd September 2022 (13th & 18th October). But these saw lesser price volatility and were quickly and easily reversed. ( Noteworthy : Stealth intervention doesn't seem to work well)
- The BoJ intervention on 22nd September was after the BoJ policy report and the actions were announced by the BoJ. ( Noteworthy : The next BoJ policy report is soon! On the 28th October)
How to prepare and take advantage of a BoJ intervention?
- Utilise a sell stop pending order.
- Judging from the previous intervention which had more than 500pip move and almost no whipsaw; you could apply the pending order below the round number level (in this case, below 149)
- And if the price continues to climb, just shift the order up accordingly.
- However, always ensure that you have a StopLoss: approximately 45 pips and a TakeProfit: of at least 200 pips which would allow you to have a very good R:R.
USD/JPY breaks above 149USD/JPY has edged higher today and is currently trading at 149.17. The yen has fallen for eight straight sessions, losing 500 points in that time.
The yen continues to set new 24-year-old lows as the dollar/yen has pushed above the 149 line. This is a higher level than when the government intervened last month, which marked the first intervention since 1998. Officials have reacted to the yen's latest slide with familiar verbal rhetoric. Bank of Japan Deputy Governor Masazumi Wakatabe has said that the yen's recent fluctuations were "clearly too rapid and too one-sided". Wakatabe added that there was no contradiction between currency intervention to prop up the yen and the BoJ's ultra-low interest rate policy, which has been the driver of the yen's poor performance this year.
Prime Minister Kishida said on Saturday that the BoJ would have to maintain policy until wages rose, and the BoJ has not shown any signs of rethinking its policy, even with the yen sliding and inflation remaining above the central bank's target of 2%. Japan's core CPI rose 2.8% in August, the fifth straight month that it has exceeded the 2% level.
The key question is whether the government again step in and intervene in the currency markets. The first intervention clearly didn't achieve its desired effect of stabilizing the yen below 145 and Japan's foreign reserves fell by a record amount in September, around 2.8 trillion yen. The game of cat-and-mouse between the government and speculators betting against the yen continues, and another currency intervention could be in the works, but it would likely have to be much larger than the first intervention in order to have a more lasting effect.
USD/JPY faces resistance at 150.04 and 151.32
There is support at 148.85 and 147.58
USD/JPY creeping higherUSD/JPY continues to move edge higher and is up 1.6% this week. In the European session, USD/JPY is trading at 147.67, up 0.25%.
The Japanese yen is once again on a downswing, after hugging the key 145 line. The dramatic intervention by Japan's Ministry of Finance (MoF) in September stemmed the yen's bleeding, but this move by Tokyo appears to have had a very short shelf-life, as the yen fall to new 24-year lows.
The burning question is with the yen currently lower than when the MOF stepped in, will it again intervene to prop up the Japanese currency? The first intervention clearly didn't achieve its desired effect of stabilizing the yen below 145 and Japan's foreign reserves fell by a record amount in September, around 2.8 trillion yen. The game of cat-and-mouse between the MOF and speculators betting against the yen continues, and another currency intervention could be in the works, but it would likely have to be much larger than the first intervention.
The MOF could try to send a stronger warning to the markets, but it's questionable whether unilateral action by Japan will be enough to change the yen's downtrend. The Bank of Japan has no intention of capping JGB yields and with the Fed likely to deliver another oversize rate hike in November, the US/Japan rate differential will continue to widen and likely weigh on the Japanese yen.
The US posted another hot inflation report for September. Headline inflation ticked lower to 8.2%, down from 8.3% but above the consensus of 8.1%. Core inflation rose to 6.6%, up from 6.3% and higher than the forecast of 6.5%. Inflation clearly is yet to peak despite monetary policy becoming restrictive, and the inflation data cements expectations for a 75 basis point hike at the November meeting.
USD/JPY is testing resistance at 147.50. Above, there is resistance at 148.32
There is support at 147.50 and 146.04
$JPY: BOJ - Let's challenge you!BOJ - Let's challenge you!
Intervening in there currency was a perfect technical set-up as well but as I started in my previous posts, we are going to re-rest the highs as we are, and we could perhaps go further if we break above that spike high of 146 area. However, we could get a fake break to either direction that's where you should be careful. Technically we have a great technical set-up once again!
Formation: Triangle
Bears: A break below 143 half handle we could head down to 142 half areas.
Bull: A break above 146 areas we could ahead above to 146 three-quarter areas.
Fundamentally: BOJ just like BOE followed and ECB are doing in having to intervene due to higher DXY - print money despite high inflation, in order to support their sovereign bond markets. BOJ intervening is being tested highly!
Key tip: Be careful of fake break outs and follow your own trade plan
Have a great week ahead,
Trade Journal
USDJPY 3rd OCTOBER 2022The yen's recent sharp fall, which has pushed up the cost of living for households as fuel, food and drink prices rise, was partly driven by the widening gap between the US Federal Reserve's aggressive monetary tightening and the BOJ's ultra-loose monetary policy. BOJ Governor Haruhiko Kuroda echoed Suzuki's warning that a rapid yen move was undesirable, but stressed his determination to maintain ultra-low interest rates that analysts blame for accelerating the decline in the Japanese currency.
"If risks to the economy materialize, we will obviously take various monetary easing measures without hesitation as needed," he said at a meeting with business executives in Osaka, western Japan. The remarks came after the government's decision on Thursday (22/9/2022) to intervene in the currency market to stem the yen's weakness by selling the dollar and buying the yen for the first time since 1998. However, analysts doubt whether the move will stop the yen's decline from falling prolonged for a long time.
The Japanese government will allow individual foreign tourists to enter, re-enact visa waivers, and remove daily arrival limits from Tuesday 11 October. "Starting October 11, Japan will relax border requirements to match the United States' while reinstating visa-free travel and individual travel," this step is a testament to Japan's beginning to emerge from its economic downturn by loosening its tourism sector policies. It is projected that there will be an increase in the number of tourists after the policy recently made by the Japanese government.
Can I tell you about: The BoE InterventionThe GBPUSD had been on a significant downtrend (see the downward channel) due to several factors:
- Strong USD, due to hawkish comments and aggressive interest rate policy path.
- Stick inflation in the UK, at record high levels despite the BoE being among the first central banks to hike rates.
- Uncertainty in the UK political environment following the ousting of PM Boris Johnson
- Concerns over the conflict at the Russian-Ukraine border
On the 23rd of September, the price broke strongly from the 1.1215 key support level following the announcement of tax cuts.
The tax cuts (biggest in 50 years), paired with subsidies for households and businesses to cope with a surge in energy prices, were aimed at boosting the flagging U.K. economy amid stubbornly high global inflation and growing economic gloom in Europe.
The market reaction was "worrying" as the government's new strategy relied on investors being willing to lend more to the UK. This saw the GBPUSD crash towards the 1.0360 support level.
On Thursday 28th of September, the BoE took emergency action by undertaking temporary and targeted purchases in the gilt market (buying long-dated UK government bonds) in an attempt to stabilise the market and to calm the turmoil in financial markets amid the collapse in the pound.
Following the intervention, the GBPUSD climbed steadily back towards the 1.1215 price area, reversing the decline for the week.
The question now would be; can the GBPUSD climb higher?
Technically, if the price breaks strongly above the 1.12 resistance area, the GBPUSD could climb towards the next resistance area of 1.1450, which is also the 127% fib expansion level.
Fundamentally, a sustained intervention from the BoE and recovery of the GBPUSD will depend on the HM Treasury to fully indemnify the purchases which are strictly time-limited and to be completed in the next two weeks.
Can I tell you about: The BoJ InterventionThe USDJPY had been climbing strongly especially as the price broke above the 140.50 resistance level to an overall high of 145.90. However, before the high of 145.90 was reached, the price had been resisted by the 145-round number resistance level.
On the 14th of September , as the USDJPY tested the 145 resistance level again, the Bank of Japan conducted a rate check, in apparent preparation for currency intervention. The signaling of the BoJ's intention to intervene in the Forex market saw the USDJPY trade lower towards the 142.50 support level.
On 22nd September , with the release of the BoJ monetary policy decision maintaining at -0.1% and failing to indicate an intervention from the BoJ, the USDJPY traded with significant volatility but eventually traded higher towards the 145.90 price level.
As the price hit the 145.90 price level, the BoJ announced that it had intervened in the foreign exchange market, to buy the yen for the first time since 1998, in an attempt to shore up the battered currency.
This saw the UDSJPY plunge to around 140.36 yen. However, as Finance Minister Shunichi Suzuki declined to disclose how much authorities had spent buying yen, whether other countries had consented to the move, and with no subsequent signs of further intervention, the Yen has almost completely retraced the reactionary plunge.
Currently trading below the 145 resistance level and the 78.60% fib level, the directional bias of the USDJPY is still heavily dependent on the strength of the USD and the overall volatility of the DXY. But it could be a while more before we see the USDJPY trade higher beyond the 146 resistance level.
USDJPY: Who can stop King Dollar?!USDJPY
Intraday - We look to Buy at 143.48 (stop at 142.29)
The primary trend remains bullish. Although we remain bullish overall, a correction is possible with plenty of room to move lower without impacting the trend higher. Support is located at 143.40 and should stem dips to this area. Dip buying offers good risk/reward.
Our profit targets will be 146.15 and 148.00
Resistance: 146.20 / 148.00 / 150.00
Support: 143.40 / 139.00 / 130.00
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$JPY - Did the intervention help?$JPY - Did the intervention help?
Didn't really help, technically it was an awesome trade but be aware even with intervention as dxy headed higher yen falls!
Japan won't intervene to defend 145 yen line-in-the-sand, ex-top foreign-exchange diplomat says.
We could head up back to those highs!
TJ
Cable; The Big Wedge PatternCable is breaking down hard after British finance minister Kwasi Kwarteng's announced tax cuts on energies. The plan is for households to save some money and to expand the supply side of the economy, but investors seem pessimistic about that, at least for the short-term period.
We see cable coming down hard, but price is moving into 1985 low with a potential throw-over formation with the current wedge pattern, so from a long-term perspective, the multiyear support may not be far away.
We will see what will the BoE response, but intervention or hawkish view can try to be supportive for the pound. Traders are already pricing 200bp of BOE hike by November this year.
Yen Intervention a Go?Week 3 of September was exciting... The yen was able to hold down a VERY strong USD while both currencies absolutely OBLITERATED any and everything in its path. I have over 600 running pips in Gbpjpy with no bottom in sight and quickly banked almost 500 pips on Eurjpy. Could this be it?
I entered a short USDJPY position on Friday evening, this is whyIt seems stupid to trade against the dollar right now, huh? Well, I think there is potentially a good early shorting opportunity against the Yen. This is why...
The Fundamental View
1. The BOJ intervened in the Forex markets on Thursday 22nd September. This is just the start. I understand that the BOJ are doing this by themselves (without the support of the Fed or other economic powers) but they definitely have some Yen buying power - what a move they caused on Thursday! The BOJ could definitely cause at least one or two more moves like this, and I really wouldn't mind being on the right direction of those moves. I understand that the BOJ's buying power may not outweigh the current USD buying power, but this leads me to my second point...
2. Dollar is king right now. No one would disagree with that. After this weeks moves though - and I guess the moves from the last couple of months - I think the dollar buying could finally lose some steam. I am not suggesting that the selling is over, but the bulk of selling may becoming to an end, which could mean the JPY could have the upper hand when it comes to buying power. The markets seem to have finally accepted the reality of recession and high inflation, which is currently being priced in - hopefully "fully" priced in within the coming days. Even if dollar pairs bounce for a few days, this could give the JPY the weight it needs to bring USDJPY down.
3. For those willing to trade against the dollar right now, or trade against the dollar in coming days or weeks, which non-Dollar currency are people going to buy? The pound?! No. The Euro?! No. Maybe the Australian Dollar but the Yen - who's central bank is actively intervening to strengthen it - seems like the obvious choice to me.
The Technical View
1. On the lower time-frames, price is around key FIB levels based on Thursday's bearish move.
2. On the 1 hour, price is also testing a clear horizontal level
3. On the 4 hour, price is also around a previous diagonal support area as resistance
4. On the weekly, price is historically far from the weekly moving averages, suggesting some downside/correction/retrace may be due
Obviously, price could continue to move higher . If it does, I will continue look for technical reasons to sell based on my fundamental beliefs .
USDJPY approaching BIG 148 Intervenion level. Wil BOJ act?The bulls are getting nervous on USDJPY as BoJ once again repeats potential intervention on the FX markets because of weak JPY which is not good for imports. Technically, we see pair trapped in a wave four consolidation which can be a flat or a triangle as first leg A and then B unfolded in three legs. As such, we still think that the current price move in 141-145 range is a correction that belongs to an ongoing uptrend. We see a nice important level around 148, especially if we consider levels back in 1998. That said, we believe that USDJPY is in some very late stages of a recent recovery, but short-term structure not showing a top yet!
EUR/USD Approaching Multiyear Technical & ECB Intervention LevelStocks are doing quite well despite a recession risk which is in focus lately as CB is hiking rates despite the economic downturn in the last few months. But it seems that word “recession” is not in FED’s vocabulary now, and this may not be change so soon after today's NFP numbers came out above expectations, so FED will stick with hawkish policy. ECB is also trying to follow the FED and fight the inflation, which is a “must” as EURUSD moves towards parity and is currently trading at a 20-year low. We must keep in mind that a weak currency in the eurozone is making inflation even worse when you are a net importer. So I think that inflation can come down faster if the currency would be stronger.
From an Elliott wave perspective we see pair trading in a higher degree complex correction down from 2008 high, now possibly in late stages with price approaching 78.6% Fib. level that comes in around parity.
Technically I assume that Eur can be much higher in years ahead, but the question is what will be the catalyst;
Higher EUR interest rates? Ukraine-Russia solution? Downturn of the USD? Maybe foreign exchange interventions?
None of us can answer this question at the moment but technically I think that 1:1 Eur vs Usd is clearly an interesting level.
However, I think if EURUSD pair moves below parity the ECB intervention may happen. The last time they acted alone was back in 2000 when EURUSD was trading around 0.9000. So firstly, they will try to bring down inflation with higher rates, but then I think intervention is also an option, especially if pair would approach that same 0.9000 level.
Trade well,
Grega
Scenario: return by means of "Fiffi" theory @ USD/TRYUSD / TRY is already triple (D1-H4-H1) overbought. If the the first D1 candle close above the north BB, the course probably turn to the middle band. Target price is 7.30000. Technical resistance: 8.50000 (magic number)
The currency pair can turn earlier, if the TCMB make a verbal or non-verbal intervention. Be prepared!
THE BEST GAGE FOR THE GLOBAL ECONOMY!THE MISALLOCATION OF RESOURCES IS SEVERELY HAMPERING THE GLOBAL ECONOMY!
THE INFLATION-ADJUSTED DEMAND FOR OIL IS COLLAPSING!
THE CREATION OF FIAT CURRENCY IS WHAT SUPPORTS THE PRICE OF OIL, NOT FREE-MARKET DEMAND!
BUT WHEN IT BEGINS TO RISE, INSTEAD OF SIGNALLING A RECOVERY, ALL HELL WILL BREAK LOOSE!
Feeling some bullish vibe on USDCHFI know FED is playing big moves ahead so far to prevent the State from the pandemic before it may cause more disruption around the country. The reason is beyond technical analysis for me to think even slightly how this pair might gonna end up trending upward. The big moves which I'm talking about from fed were the double rate cut within a month and some repo market actions. They aren't taking things slightly any more the moment when they decided to drop their benchmark rate around 0%-0.25% and some big Qe plans coming later. I know most of global central banks honchos are too serious about this pandemic at this moment and Fed has already shown us the real action lately which should slowly help to resolve the issue which had generated by that pandemic "coronavirus" within the state and its economy. Lastly don't forget about Swiss National Bank Intervening to Weaken Franc on recent data from the central banks. They just don't like their currency to get overvalued for various reasons. These conditions let me assume this pair may probably make some new swing highs.
ridethepig | JPY Market Commentary 2020.03.02Risk markets are starting to form a temporary floor via BOJ stepping in and suture the wound. Volatility is set to remain high for the coming days, Asian stocks finding a bid from the usual dip buyers while USDJPY has started to bounce from last week’s move. Looking to sell any rallies into 109.2x as we have not seen the end of the storm in currencies yet.
Historically intervention will occur on Wednesday... look to buy rallies into 109.2x for another selling opportunity! As usual thanks for all those keeping the support coming with likes, comments, charts and etc!