In my remarks yesterday in switching [and staying] PAMM trading into USDJPY, I
forgot to mention that last night the BOJ had an interest rate meeting … and while
“Peter Pan” Kuroda [I think I can, I think I can!] and crew verbally signal their
intentions in the days before the meeting, no level of hubris plus rampant
stupidity can match what they did last night … cuz not only did they keep easy
policy in place, which was expected, they doubled and tripled down emphasizing
very clearly 1) their intentions to keep monetary policy “easy” [while the FED
tightens aggressively], and 2) their intention to keep “Yield Curve Control” [YCC]
alive and well by offering every business day IF THEY HAVE TO, THE PURCHASE
OF ANY AND ALL 10 YR. JGB’s at 0.25%.
You can attempt to control interest rates, OR you can attempt to control and
manipulate your currency … you can’t do both! … and when you realize Japan
has a national debt of approximately 1.4 QUADRILLION YEN, which gets added to
every day to become larger, maybe you can do some “racyist” math and figure
out what happens if interest rate go up by even 0.5% … and the answer is simple,
the country goes full retard Venezuela or Zimbabwe, cuz you can't print money fast
enough over the depreciation it’s suffering … Japan has a staggering 266% of
debt to GDP level, and the demographics of Japan are the worst of any country
in the world, as the birth/death ratio is nowhere near 1:1, and the population is
aging quickly … in other words, it’s a “shitshow circus” locked inside of a “death
spiral” … so they simply cannot let interest rates rise, and that means the YEN
suffers loss.
And if you’re wondering, the Lounge Lizards at the FED are rapidly pursuing the
same insane policy wonk bullshit, only ‘Murica isn’t as far along as Japan … YET!
… and as the Asian session closes in pure sell YEN panic, USDJPY has a 267 PIP
range before the European session even begins, climbing up to 131.000 before
backing off … this is about a clear an indication as you’re ever gonna see in FX,
as the BOJ gives the “green light” to sell YEN, and where it goes from here to the
upside is anybody’s guess … quite frankly, we’re in “The Twilight Zone” of YEN
trading, where conditions are matching events from the great financial crisis of
2008, all the way back to YEN appreciation magic in the middle 1990’s … and if the
FED somehow raises rates by 75 bps on May 4, if you think you’ve seen panic in
USDJPY so far, just wait … if that happens, all Hell will break loose in USDJPY to
the upside, and the only thing stopping it would be direct YEN buying by the BOJ
through intervention, something they certainly aren’t afraid to do … the last time
USDJPY was this high, January 2002 was starting off … get through the 135 level,
and in the electronic age of trading, you’re in UNCHARTED TECHNICAL
TERRITORY, and if you think there are “rules” out here, you’re sadly mistaken!
… and this is where we are at right now, as Japan slithers down the economic
rathole to complete currency destruction … and in the months ahead, the inflation
coming with a vengeance to Japan with this approximate 15% devaluation in 6
weeks!, will hit Japan’s population like a brick to the face … you better keep
wearing the “I think I can shoes” cuz now try keeping 10 YR JGB’s at 0.25%!
… their only hope, is that the FED Lounge Lizards are talking “blah blah,
yada yada” bullshit about rate increases, and somehow are willing to lose even
more credibility [if that’s possible] by stepping back from their aggressive
posture … but if they go full retard rate hikes, starting with a 75 bps rate hike
at the MAY 4 meeting, look the Hell out on the upside for the damage that
happens next!
I hit my screens for trading right at the European open and see the carnage
… nobody needs to explain to me what they did while I was asleep, price action
tells the complete story … although, looking back at Peter Pan’s presser, this
guy’s level of hubris and sense of invincibility is gonna lead his country to total
ruin … they think they’re bigger than the market … they think the CNTRL-P
machine spitting out YEN like popsicle sticks makes everything OK … “we can
just print even more, right?” … problem is, someday the bill comes due, and for
Japan it is NOW! … take the normal rules for FX trading and throw them out the
window for USDJPY, cuz this pair has no rules anymore … sure, there will be
ups/downs galore in this pair, but I would be very, very careful about being short
USDJPY … you’re playing with fire while pissing into a CAT 6 Hurricane wind!
… what can possibly go wrong?
Now here at the sun coming up in New York, you’ve got to ask yourself “what’s
left?”, after a night that sees USDJPY with a 267 PIP range … sure, in this
present environment the day’s range can of course be extended … probably
won’t be, but when panic sets into a market’s mindset, strange & weird shit
almost always happens, and it’s almost impossible to accurately judge the level
of panic and how badly some people are caught the wrong way, or have a serious
case of FOMO … it can go a lot faster & farther than anybody can say.
In earlier blogs, I introduced what I call the “Day Traders / Scalpers Volatility
Ratio” [DTSVR], which is the relationship of a 60 period SMA of the m1 range of
any pair / by the spread + usual slippage … anything near or under 1:1 you must
ignore it for trading … over 1.5 : 1 is acceptable, but you really want to preferably
see > 2 : 1 … earlier in the Asian session, USDJPY was galloping along right
around the 15 [fifteen] : 1 ratio level, and now you know why it’s the most active in
20 years … that level is unsustainable, but it will give you an idea how bat shit
crazy [BSC] things were earlier … here as New York gets going, the USDJPY
DTSVR is about [6 - 7] : 1.
There simply is no let up in the demand to sell YEN … an almost 300 PIP range
today [so far, there’s still the afternoon] and even a shit GDP report is having
negligible effect on the rate … from a scalping / trading perspective, the day was
practically over before it even began … in the last 10 years [2500 trading days],
how many 300 PIP range days have there been? … dunno, but my guess would
be lower than 10, which is a fraction of 1% … staying long looking for more is a
fool’s errand.
Earlier today in the European session, one algorithm buy signal before things went
bat shit crazy [BSC] to the upside … TURNKEY PAMM UP SLIGHTLY … made back
about a third of the money stolen from us yesterday … as long as USDJPY can
keep decent ranges and trading activity, the low cost to trade make it an ideal
vehicle for either scalping or day trading … we won’t see many days with this kind
of scope, but we don’t need for USDJPY to be like Bitcoin … from my prior work
and research into USDJPY, all we need to see is about 60+ PIPS of movement in a
combined European / U.S. session, and the algorithm works with excellent results
… it’s when we get bullshit like 35 PIP ranges that present problems, simply cuz
the VIX isn’t high enough for statistical reliability for consistent profit from a trade,
cuz everything becomes a coin flip … with the BOJ and the FED on such large
divergent courses RE interest rate policy, I would think there’s a very high
probability ranges and trading conditions stay elevated and volatile for quite a
while … quite frankly, it reminds me of USDJPY pre financial crisis 2008, and
even going back before 2000 when the pair was a standout performer both
up/down, and to be truthful it’s what the central bank planners deserve when
they get everything shoved up their collective donkeys … here’s to more chaos!
Today’s opportunities for buy signals blown to Hell as soon as Kuroda started
talking last night … I don’t think we’ll see many days like this, unless there’s
more developments between the FED & BOJ … well, that’s gonna be hard to
maintain, but here we are … as far as trading markets go, “home” never looked
so good! … onto tomorrow.
… outta here … “The future’s so bright I need sunglasses”!!😎😎
… Onward & Upward!!
-vegas
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