USD/JPY New Year Analysis

Hello, friend!

I'm glad to see you again here and happy that you decided to learn something new at these hard market times. These are hard times as for the whole market, as for the USD/JPY particularly. Christmas bustle, turmoil in the US government, and the new calendar year form a very explosive cocktail of events. What shall we expect from it?

Christmas holidays in the west part of the world brought some uncertainty to the market. Traditionally this period may be considered critical because all changes to politics and strategies usually begin after the New Year holidays. This period is traditionally considered as a factor of big uncertainty and increased risks. Also, traditionally during this time, you can expect good moods from the western traders who expect annual bonuses, and high incomes for the companies who sell their products for Christmas.

Despite all this cheerfulness, the US is in anticipation of a crisis because the President decided to go all in and declare a state of emergency. It happened because D.Trump and the US Congress were not able to agree on the budget for 2019.

Picture 1. Price chart of USD/JPY for the period of 05.01.2015 - 08.01.2019.

As we can see in picture 1, all previous years starting from 2016 began with the falling of USD in relation to JPY. The current year will not be an exception. Also, the lack of agreement between the US Congress and the US President support this trend.

Picture 2. Price chart of USD/JPY for 01.12.2015 - 08.01.2019.

In picture 2 we can see that the current trend persists from December 2018. The same as in the last three years, the trend emerged in the previous December and the first half of the year could be considered as the time of a "downward" trend.

Let's see how big traders reacted to this current situation.

Picture 3. Price chart of USD/JPY and the index of "big traders" for 01.12.2015 - 08.01.2019.

As we can see, current situation with index indicates that traders now reconsidering their attitude to USD/JPY, however, such a situation is also connected with the fact that during Christmas holidays reports generally are not published.

However, we can see that despite that, current trend is already formed quite clearly. Moreover, for such an instrument, this behavior is typical, and traders are not willing to take speculative positions when trading downwards. However, such a situation is also may happen in the near future.

So, based on everything above, we believe that now is the best time for increasing "LOWER" trading positions.