Nikkei Futures and USD/JPY on Major Support

From a risk/reward perspective, if you want to be long the USD/JPY or Nikkei futures, this is the time to do it.

However, considering the risks fundamentally (loss of faith of Abenomics, massive JPY short positions, Japan starting its nuclear power programs again, etc) and the risk of the JPY carry unwind (which, as many know I am not a believer of this story but the market still trades on it like the AUD has an 800bps advantage over the JPY still…lol) should risk aversion pick up, you may think otherwise.

I want to turn your attention to the massive supports both sit on:

4-10-14NikkeiJPY

 

The USD/JPY is sitting on the massive 101.00-101.50 support

The Nikkei massive support is at 14,000.

If you are like me, and trade correlations, then you also know the JPY (6J) and SPX have a very strong inverse correlation:

4-10-146JSPX

 

And here is the 10 Year and JPY (6J):

4-10-14ZN6J

 

Lastly, here is the USD/JPY (candle) matched up with the E-mini’s, Nikkei and Bonds:

4-10-14ESJPYNikkeiZN

 

Correlations in markets are a lot like dominoes. One falls, it tends to knock down the other, then the other…

Playing long risk is fine for now, but the USD/JPY or Nikkei are so close to support, if they break down, you better “watch your 6!”

 

Blake Morrow

Chief Currency Strategist, Wizetrade

Disclaimer, I am long the JPY against most major currencies and have been for weeks.

2 thoughts on “Nikkei Futures and USD/JPY on Major Support

  1. Waheed

    Hi. Thank you for your post on USDJPY & NikFuts. I don’t seem to understand ” From a risk/reward perspective, if you want to be long the USD/JPY or Nikkei futures, this is the time to do it.” Then your comment reads ” Playing long risk is fine for now, but the USD/JPY or Nikkei are so close to support, if they break down, you better “watch your 6!” and again “Disclaimer, I am long the JPY against most major currencies and have been for weeks.”

    My apologies but find that your is confusing.Thank You

    Reply
    1. Blake Morrow Post author

      From a R/R perspective, one would think it is a good “long” however, I am short (or long JPY) and just because we are at support does not mean I am going to exit my positions. Matter of fact, should we break down, I would be inclined to add to my existing trades. I hope this helps!

      Reply

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