JPY Is In Free Fall. Why?

FOREX ANALYSIS #2

Hey there, TraderSaan is here. JPY is in free fall. So today I am going to share my analysis and setup on Japanese Yen. I am actually a swing trader, meaning I hold my position for 2-3 days or more. So I usually trade at the timframe of 4 hour (H4), 1 hour(H1), or occasionally at 30 miniutes (M30). And one more thing is that I analyze the chart in tradingview and take trade in MT4.

Fundamental Outlook

Fundamentally Japanese Yen (JPY) is considered as a safe heaven currency or safe asset which is often used by carry traders. Carry trade means buying higher yeilding currency over lower yeilding currency and selling lower yeilding currency over higher yeilding currency, that's a bit similar to the concept of Buy dip and Sell high. Anyway, lets have a look to some points in light of why JPY is selling off heavily inspite of being a safe asset.

• It seems Bank Of Japan (BOJ) is still not concern about their bank rate hike as it is March now, where other central banks of major countries have already made a move to their bank rate decisions. Some spokespersons from Japan have made some statements about BOJ outlook coming in April.

• On the other side, commodity currencies like AUD,NZD, CAD and other safe heaven currencies like CHF, USD are all taking advantage of the Japan's situation. And that's why we have some spectacular bullish move in those pairs - USDJPY, EURJPY, GBPJPY, AUDJPY, NZDJPY, CADJPY, CHFJPY. These pairs are going to the moon now.

• Most of the time, the decline of JPY is driven by widening US & Japanese interest rate differentials. And in the last press conference of Fed(US Monetary Policy Maker), the chairman of Fed Jerome Powell has sounded very hawkish and uttered upcoming rate hike. After that annoucement, JPY is heavily selling off against other currencies. That's why those pairs are skyrocket now.

Technical Outlook

It's completely funny describing JPY pairs technical outlook. I think, for JPY pairs, technical analysis has taken a back seat. Price is jokingly breaking resistance zone again and again and it's showing no intention to take a rest, even no pullback or retracements move for some pairs. So let's see some charts.

Some Charts Of JPY Pair

All charts showing here are in 4 hour(H4) timeframe.

USDJPY. Price is making of 5 years high. Consecutively bullish candle, 760pips rally to the upside constantly. Isn't it unbeliveable!

Image source: tradingview, prepared by me.

EURJPY. Price has broken a major resistance zone at level 133.000. I have a breakout - pullback setup there. Once price comes to the broken resistance zone, I am going to jump in for BUY. And I expect the market will go up in the showing direction.

Image source: tradingview, prepared by me

GBPJPY. Similar scenario like EURJPY. So, I have got the similar setup - breakout pullback. Once price comes down to test the broken resistance level 158.000, I am there to take BUY trade and expect the market will continue to go upper direction as I have shown by arrowing.

Image source: tradingview, prepared by me

AUDJPY. Price is skyrocket here. Main reason is that AUD is a commodity currency and the price commodities like oil, gold, silver is increasing because of supply issue (for Russia-Ukraine war), so AUD is appreaciating. It has made 970 pips without any proper retracement move. This is worst situation for Japanese Currency. I have 3 positions opened in this pair which I am going to talk about in my next post regarding trading.

Image source: tradingview, prepared by me

NZDJPY. Like AUDJPY, price is going to the moon here. It has made 890 pips to the upside without any hesitation. RBNZ( Reserve Bank Of New Zealand) has incresed rate hike to 1.25%, since then it has got some strong bullish bias. As Australian economy is booming, New Zealand has got some advantages for this. Because Australia is the main business (Export,Import) partner of New Zealand.
I think that's the reason behind this big move upside.

Image source: tradingview, prepared by me

CHFJPY. 700 pips move to the north. In this uncertinity, people are buying safe heaven currency and safe assets. That could be a reason which appreciates the CHF value in the forex market.

Image source: tradingview, prepared by me

I have some open Long positions in JPY crosses like AUDJPY and CADJPY. I am going to make a discussion(how I took those trades and what's my approach etc) on that in my next post.

I always take a trade when my fundamental and technical analysis say the same thing. As follows:

Case I
Fundamental = buy, Tchnical = sell, that implies Not To Trade

Case II
Fundamental =sell, Technical = buy, that implies Not To Trade

Case III
Fundamental = buy, Technical = buy, that implies Jump In For Buying

Case IV
Fundamental = sell, Technical = sell, that implies Jump In For Selling

Disclaimer: This is not any financial advise or trading mantra. My purpose is to help traders to learn. This post is made for completely educational purpose. Hope it helps.

Thank you very much if you make it to the end. Happy trade.