20 April 2011

USD/JPY : Game Plan for Risk On Hedge

  • Markets back firmly in Risk On, or more accurately, weak USD mode. This remains the true underlying trend and the week's earlier True-Finn-4%-to-19%-driven risk aversion looks to have been a mere shakeout of weak hands.
  • Core Book now focused solely on weak USD theme. As Risk On develops, USD/JPY should eventually catch a bid (by no means assured if it's really a weak USD story rather than Risk On). Plan here is to sell into that rally to hedge the rest of the book.
  • Monthly : Downtrend line resistance is at 85.70 for Apr11, projected 85.00 May11. That shall be the stop on the short USD/JPY hedge.
  • Weekly : Will scale into short from 84.00 upwards. No hedge if we don't get a nice entry level.
  • PS : Watch closely USDX when it reaches 74.17 (now 74.48). My guess is we go through easily, by a lot, take out stops, and then come back strongly to confuse further. But trend = down.

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