May 1, 2023

We're Short Yen

Frank Cabibi

Last week, some extremely dovish news came out from the Bank of Japan. This resulted a plummeting yen, and an increasingly bearish outlook on the already-beaten down currency. Here is why we are short Japanese yen and what setups we see going into this week:

EdgeFinder Analysis

Swiss-yen has been a longer term strong buy on the EdgeFinder. The score has been at +7 for a while now, and will likely continue for some time. This pair is one of the few assets that have a strong fundamental and technical bias towards CHF. In other words, it's a very one-sided score with the exception of COT and GDP.

Retail is strongly bearish, trying to catch a reversal. Smart money isn't too keen on either currency as of now. Regardless, the pair continues to push higher due to how bearish the yen is right now. Aside from COT, the fundamentals and technicals are pointing towards CHF.

The EdgeFinder is spitting out more strong biases against the Yen as UJ is now a +6. Similar outlook for UJ, the pair looks bullish right now. If price can close above that falling trend line, it would look like there is some long potential.

The BOJ announced that they will wait over a year to consider tightening monetary policy. Meanwhile, JPY's CPI came out higher than expected. We are looking at a very weak yen. On the 1D timeframe, UJ's price looks to have a lot of bullish momentum. The next test could potentially be around 137.9 where there is a previous high.

EJ is back to a strong buy on the EdgeFinder after a relatively dovish stance on the Japanese economy. Yen is looking much weaker on the day as a result, and price broke higher above a significant resistance line. A close above this level would be a good confirmation of another run to the upside.

According to a 10 year average on seasonality, EJ will have the most bearish month of the year. However, the 5 year average says something different and actually reads slight bullishness overall. Although historical trends are important, they are also subject to change, hence the 5 and 10 year average difference. What's also very reliable to look at is where smart money is going. Recent activity shows institutions further retreating from the yen while buying up the euro.

Retail Spotlight

The crowd is mixed between euro and the aussie. The strongest biases to the long side are NZDCHF, AUDNZD, and CADCHF. We can tell that retail is uncertain while also heavily bearish CADJPY, GBPJPY, AUDJPY and CHFJPY.

Smart Money Spotlight

Here is a better visual on institutional behavior. What we can see is a continuation of euro longs, declining bullishness on metals and oil, and an extremely bearish reading on yen. The weekly change in activity shows a decrease in long contracts with a large increase in shorts for JPY.

Fundamental Spotlight

Because of the recent rise in core CPI and the lack of monetary tightening, USD and EUR look fundamentally stronger. The chart at the bottom is tracking inflation reports from January of this year. What we can see is a downtrend for both the euro and dollar, but the yen's decrease in inflation is halted.

A1 Edgefinder

Watchlist
Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.

Discount code: 'READER'

Access Now

Free

Trading Plan Template
Struggling to build a successful trading plan? Download our template to get started today!
Download
Trading Gold & USD Before NFP

Gold is up nearly half a percent today while USD down a third of one as of 10:18 am EST. As we wait for the upcoming and looming NFP numbers this Friday, we can assess the economic data we already have. EdgeFinder Analysis The stock market sighed in relief after the debt ceiling bill finally […]

Read More
Can The Dollar Break This Pivotal Level?

The dollar flew higher last week as a result of resilient economic news along with a higher PCE than expected. Now the DXY has reached a decision point in price action. This week's NFP will help determine the sentiment around the potential June rate hike. Here is what we are looking at: EdgeFinder Analysis USDCAD […]

Read More
Dovish Banks Could Crash These Currencies

Considerably dovish news from central banks in the US and New Zealand has caused a major stir in the markets. Governor Orr and Vice Chairman Powell both released some reassuring news for the economy in the long term. But what does this mean for USD and NZD? EdgeFinder Analysis GBPNZD is a pair that should […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
Home
Edgefinder
VIP
Menu
homesmartphonelaptop-phonemenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram