So the USD/JPY was challenging the 119.15-20 zone just now and I posted a tweet about a short trade. My rationale was as follows:
* The Nikkei was rallying (I have no idea why…Softbank was leading the charge, but who knows..)
* And the USD/JPY was getting bid slowly and reached the 119.10/20 resistance
* However, US bond futures were still well bid (negative for USD/JPY) and the S&P Futures was flat (after getting below a key support level – Tuesday’s low). Oil was still hovering around its low too.
Overall, nothing (i.e. the bearish bias) had changed since the USD/JPY swung down from 119.40s to 118.60s. My belief was that the 119.20 level would not break (due to the other markets not moving) and send the pair down some 20-30 pips (which in this case, it did). Of course, this does not always happen, but it’s a high probability trade.
I was looking at the charts below for the trade. From top left to right: Yen Futures, S&P Futures, Oil Futures, US 2-year bond Futures, US 10-year bond futures, and Nikkei 225 Futures.
For the USD/JPY, I’m usually looking at the key levels of the pair, US yields (2, 10, and 30 years), the Nikkei 225, and S&P futures. Recently, I’ve been looking at oil too because at sub $65 its creating risk issues for the global energy sector.
This is how the action in the USD/JPY has played out so far:
This is my favorite type of trade: technicals, support/resistance levels, and inter-market analysis.