USDJPY set up ideas and trades

[LuckyMac]

This is all great info, really gives me food for thought on both

 

[Zafar Al Asad]

I've written a book describing how my system works, so I hope you don't mind if I use my "canned" explanation. It will be almost the same pat answer I've written elsewhere in these forums.

What I call sentiment (or bias) is based primarily on two factors: (1) painstakingly selected moving averages, and (2) typical price ranges.

The notion that there are no "best" moving averages is one with which I wholeheartedly disagree. However, I do not consider them to be the ones commonly used by many traders, such as the 10-, 20-, 50-, 100- or 200-period moving averages. In fact, I don't base the moving averages I use on ANY periods at all. One of the differences that makes my system unique is that all my moving averages are based on TIME, which is something I have not seen used by any other trading methodology.

I would also dispute the belief that, though a moving average will show a consistent change in the price of a security over time, there are no uniform rules that can be applied across all markets (due to the fact that every asset class has unique price histories and levels of volatility).

This is because in designing my system, part of my goal was to come up with something that was reflective of flight dynamics, which uses the laws of physics to explain how forces act on vessels to govern their performance, stability and control to ultimately determine their velocity and attitude with respect to time.

So, in the same way pilots are aware that a Boeing 747 will lift off the ground by angling upward at two to three degrees per second with a maximum angle of 10 to 15 degrees; I as a retail trader know the parameters dictating whether an asset is rising or falling from the perspective of a day, swing, or position trader. This does not change from one asset class to the next.

In other words, market sentiment or bias is strictly dependent on statistical analysis. What do the numbers say? It's as simple as that.

I also think of my system as relying on a methodology similar to that used by meteorologist to predict the weather—one based as much as possible on mathematical probability. The idea is to gather and evaluate precise, up-to-date, quantitative data and use it to calculate the odds of price reaching designated values within a given time period by patterning the system's elements after the equations, wave functions, and computer models used in weather forecasting.

But, instead of monitoring wind velocity and direction, cloud formations, humidity, temperature, and barometric pressure; I evaluate the synergy between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance levels, trend lines, and market structure, all in multiple time frames—with the result being a graphical depiction of current market conditions I can then use to help me make precise, well-timed trades.

USDJPY has been heading higher at least since January 27, 2021. There's no two ways about it. This makes its overall sentiment or bias bullish. For me, it is completely technical. However, the key (longer-term) measures I use are one-month, 12-days, 6-days, 1-week, 4-days, 2-days, 24-hours and eight-hours, and these perspectives are out of alignment with one another at the moment.

From my point of view, what I would LOVE to see happen is for the rate to drop back down to the lower regions of the associated price ranges (somewhere in the neighborhood of 129.37 to 132.33) where I could enter a long position with almost 100% certainty (conviction) that the rate would ultimately (eventually) rise once again.

thanks for your nice post with great detail. great

 

[expiated]

This is all great info, really gives me food for thought on both

And isn't that what it's all about?.

I didn't respond to SunTrader's last post because, first of all, what Brooks says about trends and trading ranges is NOT what I'm saying about trends being dependent on time frames; and second, because it's always a good idea to define your terms before getting into a debate. And at this point, it is clear to me that SunTrader and I define the term "trend" differently, and I'm okay with that. I'm not saying he's wrong. I'm just saying that when he talks about a trend and when I talk about a trend, we are not talking about the same thing, and I'm fine with just leaving it there.

 

[nitrene]

I know people are technical traders in this sub but what exactly is going on with the Yen fundamentally? Seems like technicals don't work on a currency that is being decimated by the political leaders of Japan. Seems like it keeps on going higher and higher regardless of RSI >85.

 

[Real Money]

I know people are technical traders in this sub but what exactly is going on with the Yen fundamentally? Seems like technicals don't work on a currency that is being decimated by the political leaders of Japan. Seems like it keeps on going higher and higher regardless of RSI >85.

Rate differentials driving a carry trade. Yields on the US tens vs JGB tens will cause liquidation of JGB and then Kuroda vowing to protect the rate just encourages the carry. This trade is levered to the moon right now.

I really wonder what happens to markets if this thing comes unhinged.

 

[nitrene]

I really thought the BOJ would have intervened by now to stem the slide. When are they going to do something? Or will they just let it go to 200+?

I heard some dire predictions of the Euro going to 0.75 & Yen going to 250.

 

[Real Money]

It's not just yen. Check PHP, THB, KRW.

The PBOC yuan fix came in just under the 7 handle (Bloomberg said 450 BIPS ... lol)

I have models that can trade FX but its touch and go, minute by minute stuff.

Yen futures are crazy bearish. (white line is futures VWAP)

 

[expiated]

Seems like technicals don't work on a currency that is being decimated by the political leaders of Japan. Seems like it keeps on going higher and higher regardless of RSI >85.

I trade based on technicals, but the system I use was developed by relying on five principles, the first of which was to "test everything and hold fast only to that which proves to be valid and reliable."

This led me to reject the use of almost all common indicators, such as MACD, RSI, CCI, stochastic oscillators and the like; along with any approaches involving harmonic patterns, Elliot waves, pivot points, Fibonacci ratios and whatnot.

As it turned out, I found the absolute best "atmospheric barometer" for predicting the direction in which exchange rates might ultimately be headed was nothing more than simple moving averages, with a handful of key measures evidencing superior usefulness in this role, which I (and others) call "baselines."

However, to trade with the clarity and precision I desired required me to assign specific temporal values to each individual baseline. This enabled me to answer the questions: What moving average best conveys in which direction and by how much price moves every five minutes? Or every 30 minutes? Or every four hours? Etc.

So, in the same way a pilot is aware that a Boeing 747 will lift off the ground by angling upward at two to three degrees per second with a maximum angle of 10 to 15 degrees; I as a retail trader know the parameters dictating whether an asset is rising or falling from the perspective of a day, swing, or position trader.

This works, even if it seems like an asset keeps going higher and higher, and continues to work so long as up remains up and down remains down.

 

[maxinger]

I know people are technical traders in this sub but what exactly is going on with the Yen fundamentally? Seems like technicals don't work on a currency that is being decimated by the political leaders of Japan. Seems like it keeps on going higher and higher regardless of RSI >85.

You were expecting a trend reversal when RSI is > 85.

simply remove the RSI.
That fix some of the technical problems.
I am 100% sure you will never remove the RSI.


yen will go higher and higher and there is no way to predict how high it will go.
So you need to fine-tune your trade plan to factor in these.

 

[SunTrader]

I know people are technical traders in this sub but what exactly is going on with the Yen fundamentally? Seems like technicals don't work on a currency that is being decimated by the political leaders of Japan. Seems like it keeps on going higher and higher regardless of RSI >85.

TA is not a simple as, indicator (or atmospheric barometer lol) says X do Y.