Watch for a BoJ Intervention, EURJPY Could Rally Big Probable (LONG)
16 February 2016, 01:30
0
60
Watch for a BoJ intervention:
EURJPY0.07% is setting up very interesting. Although the overall trend is to the downside & we prefer to trade with that trend, considering the news flow from Japan we need to be open to a different view. On Jan 29th Japanese 10 yr bonds went negative, ever since the Yen has been on a tear higher. There has been a lot of chatter the BoJ may intervene in order to weaken the Yen, basically an additional round of stimulation. Yesterday we saw what just a rumor of BoJ intervention would do as EURJPY0.07% rallied over 200 Pips.
With that said you should not be looking to short this pair or any other Yen pair where the Yen is the trail currency. We understand the momentum is to the downside, the temptation to trade from the short side is high but when the BoJ intervenes it will most likely NOT come during a scheduled news event. It will be announced without a moment’s notice and the Yens move to the downside will be quite violent, pushing EURJPY0.07% 100’s if not a 1,000 Pips. As you can see there are two short-term trendlines drawn, we prefer to see EURJPY0.07% trade above the higher trendline which would put price above the Ichimoku cloud . Although that is not enough to give us a buy signal it’s a start, we also need the trailing Ichimoku MA (the most important component of Ichimoku ) to trade above the cloud. The final piece of confirmation will come when our algorithm (seen in blue) gives a forecast of prices moving higher with odds of 85% chance or more.
EURJPY0.07% is setting up very interesting. Although the overall trend is to the downside & we prefer to trade with that trend, considering the news flow from Japan we need to be open to a different view. On Jan 29th Japanese 10 yr bonds went negative, ever since the Yen has been on a tear higher. There has been a lot of chatter the BoJ may intervene in order to weaken the Yen, basically an additional round of stimulation. Yesterday we saw what just a rumor of BoJ intervention would do as EURJPY0.07% rallied over 200 Pips.
With that said you should not be looking to short this pair or any other Yen pair where the Yen is the trail currency. We understand the momentum is to the downside, the temptation to trade from the short side is high but when the BoJ intervenes it will most likely NOT come during a scheduled news event. It will be announced without a moment’s notice and the Yens move to the downside will be quite violent, pushing EURJPY0.07% 100’s if not a 1,000 Pips. As you can see there are two short-term trendlines drawn, we prefer to see EURJPY0.07% trade above the higher trendline which would put price above the Ichimoku cloud . Although that is not enough to give us a buy signal it’s a start, we also need the trailing Ichimoku MA (the most important component of Ichimoku ) to trade above the cloud. The final piece of confirmation will come when our algorithm (seen in blue) gives a forecast of prices moving higher with odds of 85% chance or more.
