New trends of USDJPY

Basic arguments

Since the last significant event was the changing of the US interest rate, then the decreasing of USD is only a matter of time. However, the dynamics resulting from interventions have changed the landscape of currency markets significantly. Nevertheless, such a market situation indicates the fact that overpriced FRS assets depressed by lowering of the interest rate were sold and reinvested into USD. The decreasing of the interest rate implies economic growth for the American economy, and such investments will bring profits very soon.

Technical arguments

Technically, such a situation looks understandable and aimed for correction. Sharp volatility growth on the market more looks like speculation than like a structural shift because such a change would be in odds with the market logic and the market is about to close the window.

Positions of big traders

Picture 1. A price chart of USDJPY and a chart of the indicator of big traders for the period of 06.07.2019 - 06.08.2019.

As we can see in picture 1, during the last month the demand on the asset has changed and led to lowering of JPY. However, such a light bounce is attributable to adjustments after dramatic and unpredictable falling.

Forecast

Considering the above-mentioned facts, we expect a DOWNWARD movement for this asset. It is also indicated by current speculative and technical situations as well as positions of big traders.

We recommend to use the following indicators for better control over positions:

• RSI
• Bollinger Lines

RSI will help you to identify the situations when the market is in overbought or oversold conditions. Bollinger lines will help to see when the market is ready to correct.

We recommend keeping the ratio of 1 trade up and 2 trades down to keep the level of risk moderate.