The Panthenon Investment Group

Just a quick update on my blog, I had twittered earlier that I short the USDJPY twice; once at 104.75 and another time at 104.93 for an average cost of 104.84.

USDJPY came off from a high of 105.44 before midnight Asia time on Friday and by 2am in the morning it was down to 104.55 and closed at 104.63.

Let’s see what this week brings for the yen, however, I must admit that I am not entirely comfortable with FOMC rate decision on Thursday morning.

I know Yellen won’t raise interest rates in a FOMC decision date that has no press conference, will cause way too much irrational volatility and also so close to the election.

She will raise interest rates and I do believe it will be in December. However, two weeks ago, in a speech she mentioned that it is alright for the economy to overheat a little before the Fed steps in to curb it by raising interest rates. She felt that there was no real danger in terms of significant negative impact for the US growth to run away a little.

This was something I discussed in one of my earlier blog post.  The USA is such a mature economic dinosaur, just how fast can the economy run if it wishes to overheat? 3% or 4% GDP, but that is fine.

Anyway, I will probably square my yen position before Thursday, simply because I do not wish to get caught on the wrong foot.  After all, all my expectations is 0.5 yen or slightly better and I am out.

Woke up this morning and before making breakfast checked USDJPY, it seemed to be peaking at 104.60+, hit a high of 104.68.

I decided to square my position at 104.60, locking in a trading profit of 0.45 yen.  Not bad!

In the last 24 hours, managed to lock in 1.04 yen just trading the channel from 102 to 105. I believe this channel will continue for a little longer.

Let’s see. As they say, put you monies where you mouth is……(“,).

When USDJPY hit a low of 104.04 this evening, I realized that it created a double bottom as it hit an earlier bottm of 104.06 in the opening of Aussie session this morning.

I decided to square my position at 104.05 for a trading profit of 0.59 yen.  Not too bad.

I also established a Long USDJPY at 104.15. Let’s see if we can ride the USDJPY back up to 104.80?

Came home from dinner to see that USDJPY trended slightly higher at 104.85, so I decided to Short USDJPY again at 104.83 and with my earlier trade at 104.45, it brings my average down to 104.64.

Since, the trades are done on cash basis, I can afford to wait for the market to come to me.

Currently, spot is at 104.62.

We had a good run trading USDJPY between 100 and 103 in August, I mentioned that potentially we needed to re-look this trading strategy going forward.

Taking into account the continuing Brexit fears which will strengthen the JPY, but then again, weak growth and low CPI in Japan will weaken the JPY, then, the supposed ‘helicopter monies’ hanging overhead which will weaken the JPY, then the threat of FOMC rate hike in December which will weaken the JPY.

All in all, I believe the USDJPY channel has now moved to a potential new channel, that is, 102 to 104 range.  Look at the 1H and 4H price chart that I have appended below including the Fibo: –

Let’s continue to observe this new channel

On last Thursday, 13 October 2016, when I woke up I realized that USDJPY had spiked up to 104.47 off the previous night’s Brexit fears.

I decided to Short USDJPY at 104.47 at about 9:30am.

About two hours later, USDJPY strengthened to 103.66, so I decided to square my position and locked in trading profits of 0.81 yen.

Thank you USDJPY.  At least this trade made up for the 0.30 yen loss earlier in the week.