For the last two weeks the Yen has been range bound dancing on both sides of par (1.0000). Futures as of this post are consolidating around all the major MAs I use in my FX trading as seen on the daily chart below. My interpretation is we are taking a breath before jumping higher in the coming weeks. As seen on the chart below we have a descending triangle pattern and before September futures reach the apex I expect prices to move out of the range that has contained prices for several months. At a minimum the set up should allow a trade to the top of the range near $1.0350.
One consideration and potential risk factor that will likely have an impact on pricing in the immediate futures is the CPI # out this evening just after the Asian open. When most of us are sleeping CPI out of Japan will be issued and could get this trade moving. In fact I suspect this number will get futures moving 1% plus in either direction. The previous figure was -0.3% and the consensus for July CPI is 0.1%
For two perspectives see a daily and weekly chart below:
Daily Japanese Yen:
Weekly Japanese Yen:
Ok so as most followers are aware I do a lot of technical analyses but let’s incorporate a seasonal factor in the mix. Let me be crystal clear past performance is not indicative of future results. There are however recognizable patterns looking at price action year over year. 14 out of the last 15 years buying September Yen futures on 7/27 and holding until 9/7 has been a profitable transaction. The average profit has been $2,510 or just better than 2 cents. I subscribe to a service that provides trade ideas as such on a monthly basis and though each trade needs to be evaluated before buying/selling I generally get a few solid ideas each month. I sometimes do not take trades because maybe the set up fundamentally or technically are conflicting. Every once in a while the stars align. Even with a track record use discipline and cut losses if the trade goes awry. Also recognize we are 2 days early so this could prove to be good or bad…time will tell. In previous years this trade did move over $3,000 against investors so if not willing to take heat look elsewhere.
Good luck and feel free to contact me to inquire about trade ideas this service provides in the coming weeks…including trades in Treasuries, metals and livestock just to name a few.