It is time for USDJPY

It is been long that we did not take a look at USDJPY. Meanwhile, the pair was quite calm and remained in an orderly manner. It reached quite high positions, and then went into dive and stayed in this state till the present time. This interesting dynamics is expressed in long, expressive trends and equally passionate corrections.

Basic arguments

The current state of this currency pair is not the most dynamic one, because the US Dollar often is regarded as self-contained. Moreover, its current state is quite precarious and even a bit risky. All risk arguments can be explained in one word - Trump. However, here is also expected another fateful decision regarding the decreasing of the dollar interest rate, and this decision may turn upside down many things, not only USDJPY.

However, the interest rates continue to create a big hole between currencies, which looks like a 2,6% appreciation of the US dollar per year. So, we can consider the current situation on the market as a correction after a sharp strengthening of USD. And after shart movements, there are always corrections. The current forward rate for the next two weeks is close to 0.

Technical arguments

Technically the currency pair looks like growing for the next two weeks perspective. Long and grueling correction movement after the price of 112 Yen per Dollar has to end eventually. However, it is still too early to talk about full change in direction for long term growth.

Picture 1. The price chart of USDJPY for 14.04.2019 - 14.05.2019.

The current trend (in picture 1) remained for quite a long time and can be considered as a stage of correction for setting a fair price for USDJPY.

However, as we can see in picture 1, long downward movement should've drained the service life of the currency pair downwards movement.

Analysis of big traders' positions

Picture 2. A price chart of USDJPY with the index of big traders for 14.04.2019 - 14.05.2019.

As we can see in picture 2, the positions of big traders are close to minimums supporting the dynamics of JPY by the fact that the sale happens at the moment when the growth is most probable. The more growth we will see - the more speculative will be the decline in prices.

Based on the current arguments, we can say that the chance of growth of USDJPY remains high. Current price is very close to a fair price, so after a long downward movement, it may turn to the growth correction.

Forecast:

In summary, we can conclude that the current perspective of USDJPY tied up with a growth correction for increasing the price, so, the most probable forecast is to invest upper.

The following technical indicators will be the most helpful to assess trading instruments:

- ROC

- RSI (Relative Strength Index)

We recommend keeping the ratio of 3 trades UP and 2 trades DOWN for better control of the positions.