Yen returns earlier profits on BOJ QE expectations

Yen pairs sold off drastically as traders became bearish with expected Bank of Japan continued fiscal stimulus.

Traders currently forecast a 6 trillion Yen injection into the economy over the next few years. With the supply surplus, Yen positions are being unloaded and are expected to continue as Japan faces increased deflation severity.

Japan CPI

EURJPY currently experienced a 50% retracement since the wedge formation break lower. Previous forecasted selloff has been complete and now I expect further rally with any entry  upon complete recovery from pre-selloff levels.


This neckline movement is near complete. Currently, I forecast price to resume the 116.350~ level before we can expect any downside. However, I continue to remain uncertain on possible downside movements. Until we see price surpass the pre-selloff levels, I will not be making trades on the Yen pairs.


Similarly with the USDJPY pair, any long entries must wait until price recovery back to the 105.831~ price level. Currently I have two possible support zones marked with the 104~ zone already tested and holding up.

The reason to wait for full price recovery signals a turning point from short sellers fully covering their positions. As price rallies to pre-selloff levels, it better marks a true market sentiment change from a bearish outlook to bullish. For this reason, we wait out the recovery and do not contribute any volume while we monitor if short sellers are covering their positions.


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