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Wednesday, 10 February 2016 11:06

Jap-on or Jap-off? Bearish set up on Yen | Bullish set up on USD/JPY

We are aware that to publish a new set-up on the Yen and USD/JPY when the markets are in full 'risk off' mode may sound at least incautious. Nevertheless we have to report what we see, it's our mission.
And what we see is a possible short opportunity on Mach 2016 Japanese Yen Futures or, if you prefere, a long opportunity on USD/JPY.


First we notice that the price has reached the top of a rising channel drawing a shooting star that, according to the Volume Spread Analysis, can also be defined as a pseudo upthrust.

yen channel shooting star pseudo upthrust trading for purpose

Volume Zone Oscillator

The very high VZO (Volume Zone Oscillator) level and especially a clear a divergence between the price, which has risen from the previous high (January the 20th) to the last one (yesterday), and the indicator, which in the same period of time has fallen to a lower level, would suggest a possible short term reversal.

yen vzo volume zone oscillator trading for purpose

Commitment of Traders

If we look at the COT Index, the commercials bearish stance -combined with the fact that large speculators began selling- could confirm our guess.

yen cot commitment of traders trading for purpose


Finally, looking at the seasonality we see a strong bearish trend until the first week of march that would also suggest a bearish reversal.

yen seasonality bearish trading for purpose

Of course, if you are a forex trader, you can read this signal in the opposite direction for USD/JPY, with the prospect of a rebound.
Remember: this is not a trade solicitation and, if you decide to trade, you do it at your own responsibility.

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