USD and JPY converge again

How to work with this article?

The dynamics of the currency pair recently aims to converge to the average and reevaluate the positions. It happens because of the interest rate changes in the USA.

Fundamentals

The key point is a convergence of a cross rate to a long term rate for a reevaluation of the USD assets. In the near term, a forward rate will remain on the JPY side and will move the price downwards.

Technical arguments

We can see that the general trend has clearly established downwards. And we can see the support of the downwards movement on the bounce of the double top on 01.10.2019.

Big traders positions

Picture 1

Picture 1. A price chart of USDJPY and the chart of the indicator of big traders for the period of 08.09.2019 - 08.10.2019.

As we can see in picture 1, JPY positions began to grow. This growth will remain during the whole USDJPY downward trend.

To sum it up

Investments in currencies, such as USDJPY, definitely involve some level of extra risk. The general situation with currencies at this moment indicates the strengthening of JPY. Also, now, the majority of factors show that USDJPY will go down. At the present moment, the most rational strategy will be keeping a moderate position with ratio: 60% downwards trades, 40% upwards trades.

Also, we recommend using the following indicators for the effective opening of trades:

• Moving Average (SMA)
• RSI (Relative Strength Index)