Yen breakout

2020년 2월 23일

USDJPY

The yen has been in a consolidation range for the past 5 years, with USDJPY moving inside a triangle. That pattern has been resolved in the past few days, with big implication for the long term trend of this pair - and, probably, other yen pairs too. A consideration about FX in the past decade that always seems too occour to me is that the currency market has been displaying, generally, lower and lower levels of volatility - albeit a few short-lived exceptions. As volatility itself is kinda cyclical, I really think that we're gonna see higher levels of volatility in all the main FX pair, in sync with the last wave of easing policies by central banks around the world. In a quite contrarian fashion, I'm calling for higher interest rates in the debt market and higher volatility in the FX market.

The trade setup is rather simple. Short the yen (long USDJPY) with a stop loss below last week's low. Hold it mid to long term.