USD/JPY Discussion

Everybody has their opinion but I believe it is silly to ignore your trading time frame and the one above it .... and time itself.

Time, price and pattern are "the keys to the kingdom".

Everybody has their opinion but I believe it is silly to ignore your trading time frame and at least the one above it .... plus time itself.

Time, price and pattern are "the keys to the kingdom".

Sell zone entered, parameters met, one of three potential positions filled.

RENKO BRICK SIZE = 10.1 PIPS (10% of 20 ADR)

Daily candle is now green...if it can close green for the day, i am going all out long next week for this pair and maybe gbpjpy..

The Japanese bulls continue to gain positive traction and USD/JPY hit a multi month low at 105.54 today. Although the short term outlook remains bearish according to indicators on the H4, the price bounced just ahead of US opening, having a patch of macro releases to define the further movement.

More longs the better.

I'm closing my chart for this week, happy weekend guys..

fair value is at 100, every bank knows that, and that is where the pair is going

sell the rallies

you dont think It could retest 106 then move up to 108.5

USD/JPY, the greatest disappointment of all time.

Could you tell us why you think so?

KP

i believe many are expecting a rebound, but well..

yea, it could go up to 110 even before coming back down again

it is heavily oversold

No such thing as "oversold" or "overbought"
The only way to oversell something is to completely run out of inventory. If the market ran out of inventory, how is price supposed to go down to the 100 bank level?
It's a concept thrown around in trading circles for people who use oscillators, hence a fictitious mathematical equation is indicating an event that doesn't exist!
In my opinion....

I know where you are going with this, and I actually agree with you in theory. However, there is something I like to point out. There can be a such thing as over-sold or over-bought. Over-sold can happen if you do not have the underlying asset. Selling essentially means you have to deliver the underlying asset eventually. Buying means you have to show your cash eventually.

Having said this, I'm not a big fan of using oversold/overbought in forex. Such indicators have some use in my opinion, but it should not be a leading indicator.

Yet (OK, I know I sound like an indecisive little girl), in my opinion, UJ has been sold down so hard that I think most people expect a strong bounce. Not just UJ, but EJ, AJ, GJ, NJ, etc. We know that BOJ prefers UJ to be closer to 110 than 105. XXX/JPY is an indicator of risk-on/risk-off in the markets as well. Markets are green, Dow is back above 25,000 but XXX/JPY continues to struggle. I wonder why.

Had a buy limit in the previous daily low, and I took another two long entries after the Euro presented no sings of reversal after that false break-out.
Weakness is clear.
There are two important fibonacci retracement supports at this level.
Monthly low and of course price action.
Moved S/L from monthly to daily low after the daily high was breached.

Over "bought" or "sold" is a term used to describe the phenomenon of a random mathematical equation's viewable curve going above or below some made up and arbitrary threshold which "fits" or "mirrors" the price curves or rotations you see on your charts. An oscillator will curve up when price curves up and curve down when price curves down. The uselessness of it can't be overstated as all you have to do is look at price on your charts and "imagine" a curve. That imaginary curve will coincide with any oscillator you use, but if you need to see a 2nd curve to confirm the the 1st, that's up to you.

Over "anything" is simply a term used by traders with a "belief" that because price has let's say gone down for a while, it must be over sold and go up! It is a psychological confirmation with no relevance to trading simply tied to ones misunderstanding of how the markets operate. Look how far it went down, it must be over sold! Completely rediculous and dangerous assumption with absolutely no merit!

Price does only 2 things on every chart: travel sideways or vertically. At the interbank level, when a large order comes into the market and price spikes up or vertically, either the bank or aggregates take on the risk of the trade, and this trade must be mitigated by the carrier of risk. This is what is responsible for all the rotations you see on all different time frames. When price shoots out of a horizontal level, a cascade of the banks computer algo's immediately respond to control and ensure risk is kept to a minimum. This is why on most occasions when price climbs out of a level, it will soon return close to the point of origin of the move. As these checks and balancing occurs over the course of a "trend" price can't be over sold or over bought because a trend could last 3 days, 3 weeks, 3 months, or 3 years! So at what point is any market over sold or over bought?!!! Completely bogus....

I guess you can say that an asset/currency is overbought/oversold when it shoots out of an equilibrium level (range) without any real change in the fundamental picture. In the case of UJ for example, is there an economic rationale for a 7% drop since the beginning of the year? Not really...US interest rates are going up and indeed that might reflect to a certain extent the fact that USD denominated assets have become less attractive in the short term, but ultimately those same rising yields will undoubtedly attract more capital in search of yield which will lead to dollar appreciation and mean reversion. Also, the fact that the BOJ remains engaged in the biggest QE program on the planet while the FED is actually tightening their monetary policy fairly aggressively, suggests that we might indeed see some mean reversion to the upside back into the range for this pair. Similarly, as you pointed out, a currency can be OB/OS in the short term once a large order gets executed and shifts the "equilibrium" price to the upside/downside temporarily only for the market to retrace to the previous range eventually once the order has been filled

Looks like a bearish exhaustion candle on daily. Does anyone expect a bounce here?