Today’s USD/JPY: how long will the rise continue?

Hello, I am Neko, from AI Trade Idea Lab?

The USD/JPY remains in a phase 2 range centered around 159 yen.
Since the upper and lower boundaries are hard to identify, the three-range trading tactics (note) are almost unusable.

It is a broken-winged angel state.

Even my proud bat can’t be used effectively.

The phase-2 range continuing is obvious to anyone as a fact .

There are various hypotheses and opinions about why this is so.
Opinions influenced by people's motives are called “truth (hypothesis).”

Since there are people who talk about truth (hypotheses or dogmatic theories) as if it were fact,
even if they have no ill intent, we must be careful to use them as references.

Here is the truth we speak.

The USD/JPY has a vol-covered put around the 158.40-158.50 area,
and

while continuously buying the actuals,
there is also a defensive drive on the upside
in selling calls, which is likely a”set””” as a hypothesis.

Who is executing this? There are various possibilities,
but the reasons like the US-Japan interest-rate gap, or wars, oil prices, etc., alone cannot explain it,

and judging whether it is correct or wrong is difficult.

Even if we identify the perpetrators, it does not mean we will profit, haha.

Debating with colleagues about who creates such a situation is very enjoyable, though.


More important than enjoyment is turning hypotheses into profits.

We are following a strategy centered around 159 yen.

Yesterday, it fell from near 159.80 to 159 yen, and since it was stagnant, we took a selling stance.


AI-suggested trade idea also involves selling in the 158.80-159.00 zone.
Target is 158.50

There was an option around 158.35-158.40,
so we could pull it down to there at most.

From around noon it declined rapidly and reached the target in an instant, ending the trade.

Currently, it has fully retraced up to 159.00 and is stagnating.
The strong rebound is again due to the influence of the aforementioned put options.

This time the option usage is possibly for insurance to cover the sudden drop,
so both put option sellers and buyers do not want to see the price drop below that level.


As current spot traders, we are hit by the backwash directly.
With limited price movement but high volatility, we can be swung quite a bit in the opposite direction,

and the timing of moves is slow... lately it is deep into the night.



It’s a quite harsh market, but
this situation will not last forever.

When the option expiry passes, or when volatility cools down,
the advantages of options lessen,

and we expect this situation to end.


If possible, by the end of April
or at latest by mid-May,

shall we ride through this vast sea?







Note: the three range tactics
- Reversal trading from the upper and lower edges
- Breakout trading from the upper and lower edges
- Short-term follow-through crossing the central line