The Case for USDJPY Over Performance.
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Context posts;
Broad USD bull thesis.
(Please read this before making cliche USD objections. I've covered them in the main USD bull thesis).
Bottoming strategies examples for context on the style of forecast move.
Both of these reversals had a similar confluence of signals. When this confluence of signals forms we commonly are about to see bear trend failure.
There are various things that can happen off bear trend failure. We can have a shallow retracement, a full retracement (about 3/4 - 5/6 of last drop). There can be a spike out high. Of course, there can be the reversal into overall uptrend.
An example of the range for a shallow retracement is shown on the BTC example. The spike out and reversal shown in the SPX example.
In all instances these tend to be a parabolic move.
The same things tend to happen;
1- The asset has been crashing, and it's been going down with some reason to back it.
2- Something terrible happens. Brings a real sense of the bear move MUST continue.
3 - There's a slow ranging period. During this many bear thesis' are posted.
4 - There's an abrupt upwards break and when the rest holds a strong uptrend forms.
5 - Into the latter sections (Risk area, IMO) it becomes popular to talk about the new bull.
Hopefully these sections are easy to ID in the SPX and BTC moves. BTC was absolutely classic. There was the bad news with FTX. Suddenly everyone was a bear market expert and people were lining up to post their big short thesis on something that had just hit 70% down and was most likely going to squeeze.
SPX, you'd have seen the same. If you discussed the potential of EVEN a shallow - medium retracement in SPX people called you a "Pivot bro". You were told you were too stupid to understand markets and you needed the FED to hold your hand and make it easy. When they didn't, you were doomed.
As it turned out in this example and in every example you can look at in the last 25 years, the FED didn't have to pivot for the market to rally. Markets more often rally on interest rate hikes than not. Read about that below:
But I digress. The point is there's extreme pessimism on the asset in question and people can make a rock solid sounding case for the continued downtrend - or at least an uptrend not forming.
"SBF starts the domino effect toppling the crypto industry".
"FED are consistent in their calls for higher for longer".
And with USDJPY;
"BoJ will intervene if price goes over 150".
But what if they don't?
What if the fundie narrative sounds good and is wrong? Like so many other examples.
Well, if it is, the USDJPY would be set to potentially enter into a stage of hyper over performance.
Progressively getting strong until at some point in the future you're berated if you mention the USDJPY might drop.
If we get to that stage, I'll flip to using the bear models I like to use after this style of move.
Broad USD bull thesis.
(Please read this before making cliche USD objections. I've covered them in the main USD bull thesis).
Bottoming strategies examples for context on the style of forecast move.
Both of these reversals had a similar confluence of signals. When this confluence of signals forms we commonly are about to see bear trend failure.
There are various things that can happen off bear trend failure. We can have a shallow retracement, a full retracement (about 3/4 - 5/6 of last drop). There can be a spike out high. Of course, there can be the reversal into overall uptrend.
An example of the range for a shallow retracement is shown on the BTC example. The spike out and reversal shown in the SPX example.
In all instances these tend to be a parabolic move.
The same things tend to happen;
1- The asset has been crashing, and it's been going down with some reason to back it.
2- Something terrible happens. Brings a real sense of the bear move MUST continue.
3 - There's a slow ranging period. During this many bear thesis' are posted.
4 - There's an abrupt upwards break and when the rest holds a strong uptrend forms.
5 - Into the latter sections (Risk area, IMO) it becomes popular to talk about the new bull.
Hopefully these sections are easy to ID in the SPX and BTC moves. BTC was absolutely classic. There was the bad news with FTX. Suddenly everyone was a bear market expert and people were lining up to post their big short thesis on something that had just hit 70% down and was most likely going to squeeze.
SPX, you'd have seen the same. If you discussed the potential of EVEN a shallow - medium retracement in SPX people called you a "Pivot bro". You were told you were too stupid to understand markets and you needed the FED to hold your hand and make it easy. When they didn't, you were doomed.
As it turned out in this example and in every example you can look at in the last 25 years, the FED didn't have to pivot for the market to rally. Markets more often rally on interest rate hikes than not. Read about that below:
But I digress. The point is there's extreme pessimism on the asset in question and people can make a rock solid sounding case for the continued downtrend - or at least an uptrend not forming.
"SBF starts the domino effect toppling the crypto industry".
"FED are consistent in their calls for higher for longer".
And with USDJPY;
"BoJ will intervene if price goes over 150".
But what if they don't?
What if the fundie narrative sounds good and is wrong? Like so many other examples.
Well, if it is, the USDJPY would be set to potentially enter into a stage of hyper over performance.
Progressively getting strong until at some point in the future you're berated if you mention the USDJPY might drop.
If we get to that stage, I'll flip to using the bear models I like to use after this style of move.
ノート
Today USDJPY tagged 154. Last time this price was seen was 34 years ago.
Interesting times.
ノート
Honestly, this was originally more of a long USD than short JPY idea but upon further review of the yen crosses I'm starting to think it may be possible if this move plays out it's driven by a Yen crash. Yen looks a bit crashy over the majors. Here's some thoughts on the macro Yen trends.
ノート
USDJPY closed the week a bit over 158.A wild week. Including all ups and down USDJPY has a net move of close to 1,000 pips on Friday. Souring in the Asia/London sessions. Crashing to below where it started in the USD session (Full crash was 2 minutes and close to 200 pips) only to absolutely boom to new highs.
160 ish zone is a major inflection point. If the USDJPY move is going to stall out I think it'd be soon.
If it's going to breakout, the uptrend should become increasingly obvious.
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BTD Very bad for the bull case if this support breaks though.
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If it's going to happen, I think the most impressive part of this rally is about to start soon. 
ノート
Critical point for this now. If the rally is to fail I think it will be around 160. If 160 breaks then that opens the door to 190. Which is when the truly exceptional USDJPY would be.
It's becoming more and more possible we're witnessing the end of a downtrend that has persisted since the 1970s.
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Starting to seriously think USDJPY is topping out at 161. If it is, can't make a good bull case for it before 140 and there are ways even make a case for a new low.
My bias on USDJPY is shifting. Been a great run from 150 but I think we're maybe at the end.
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So, the 161 top and drop came.
This might be the start of the USDJPY bull breakout.
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