The USD/JPY starts with a gap opening; there are four types of gaps.

Hello, I’m Neko-chan from the Trade Idea Lab.
With the Liberal Democratic Party leadership election over, Japan’s political vacuum has been resolved. As planned (?) a gap-up.

Last week there was a cautious mood, but it wasn’t a surprise gap-up since everyone knew the leader would be decided on Saturday.

In a previous post I mentioned four kinds of gaps (windows).

This time I see it as a common gap.
This is a strong gap triggered by fundamentals (the leadership election), so it’s a gap that’s hard to fill. I’d like to buy the dip after watching the reaction in London time.

Looking downward, there is a large 147-yen call option that is in-the-money with ample intrinsic value. It’s waiting for the options expiration, so it’s not easy to get pulled in. Last week’s Ueda (the new BOJ Governor) also did not mention a rate hike and was dovish. Until the week of the October 30 (BOJ monetary policy announcement), expectations of rate hikes are unlikely to emerge.

On the upside, right above is the 150-yen option. It’s no longer surprising whenever it reaches that level, and if it breaks, it could target the recent high of 150.8–151 yen. The Nikkei Stock Average may also respond positively and continue rising.

Incidentally, while the BOJ announced plans to sell the Nikkei ETF, it’s becoming more likely that the purpose isn’t to actually sell but to use it as a pretext to mark the book value to market. It’s similar to Trump trying to erase US debt using gold and cryptocurrencies.