From the Desk of Ian Culley @IanCulley
If it wasn't at the very top of the list, the Japanese yen was certainly among the best shorts of 2022.
But the times they are a-changin’.
King Dollar has ducked down a dark alley.
And it doesn't take a weatherman to tell us to buy the yen.
Here are Japanese yen futures carving out a year-long base following fresh 30-year lows:
I like buying strength on a breakout of this bottoming formation. But the yen has quite a way to travel before completing this possible double bottom.
I don’t want to miss those potential gains, so let’s get tactical by taking a closer look…
Check out the daily chart with a Fibonacci retracement framing the 2023 decline:
I’m long Japanese yen futures against 0.7075 (the 38.2 retracement level), targeting 0.7850.
I’ll take profits if and when it reaches our initial target. But will re-enter the trade on a decisive upside resolution from the developing double bottom on the weekly chart.
To be clear, I want nothing to do with the yen if it slips back below our risk level. The March contract is trading just below that level as I write, so wait for a breakout.
The message is simple: Buy the yen.
And remember to track this Friday’s closing prices as we head into a three-day weekend and a seasonally weak period for King Dollar.
Stay tuned.
Thanks for reading, and happy holidays.
Let me know what you think. I love hearing from you!
And be sure to download this week’s Currency Report!
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