【Dollar Yen】Range continues until Bank of Japan policy rate decision; still, reasons why there is an advantage to going short
Dollar/yen is currently around 159.5.
Looking at the 4-hour chart, after rising from 152 to 160, it has repeatedly been knocked back to the 158s and then returned to the 159s.
There is no clear sense of direction. This is a typical range.
Until next week's Bank of Japan policy rate announcement, this state will continue
The next major factor is the BoJ policy rate announcement. Until then, the market cannot determine a direction.
There may be temporary swings due to Trump statements, but it is unlikely to develop into a one-way trend. Up to 160 yen, down to 158 yen. I am assuming a range that moves in between.
Even in a range, it doesn’t mean you can’t trade. However, actively taking positions when there is no direction is the most important thing not to do.
I will say it again: the advantage of long positions is low
I think some people want to go long within this range. Buy around 158 and sell around 159. Indeed, there are moments where that can profit in the short term.
But I do not recommend longs from here. As I have said many times, I will整理 the reasons again.
① The 160 barrier is too heavy
There have been many attempts at 160, but each time they are knocked back. There isn’t enough energy to break above. Even if you enter long, you must take profit near 160; otherwise, it will revert. The potential profit range is limited.
② Intervention risk is upside
If the dollar/yen rises above 160 again, rhetoric and actual intervention will be watched closely. This risk exists on the upside. There is zero intervention risk on the downside.
③ A shift to a stronger yen phase is near
I have been saying for a while that, medium term, a strong yen phase will begin. Normalization of BoJ monetary policy, expectations of U.S. rate cuts, geopolitical risk—the fundamentals are gradually taking effect.
The current range is the accumulation phase before a decline.
Reasons to favor shorts
This is the reverse of the above, but I will summarize again.
Upside is limited:The 160 barrier plus intervention risk means the upside is capped.
There is more room on the downside:If 158 is clearly broken, targets in the 157s and even lower become visible.
Risk-reward:Longs can yield 50 pips at take profit but may incur up to 200 pips from intervention. Shorts can target 100–200 pips with limited upside risk.
Trend direction:If you anticipate a mid-term shift to a stronger yen, shorts are riding the trend. Longs are going against it.
Ultimately, shorts will win. That is how I see it.
How to operate within the range
What to do during the range period until the BoJ announcement:
・Set up shorts around the high-158s to 160.There is no need to rush to sell in the 158s. Enter after getting drawn toward the upper limit of the range; the stop loss will be shallow and the risk-reward will be favorable.
・If going long, do so in the early 158s with a short take profitIf you must go long, pick up in the early 158s at the bottom of the range and take profit early in the 159s. Don’t be greedy.
・Reduce positions before the BoJ announcementNo one knows which way it will move on the announcement. It’s dangerous to be fully positioned before the release.
・Some days with no forced trades are okayIf there are no signals in the range, do nothing. Wait for a real opportunity. This is the most important thing.
Summary
・Until the BoJ policy rate announcement, expect a range (158–160)
・Longs have low edge (160 barrier, intervention risk, shift to a stronger yen)
・Shorts have advantages (limited upside, large downside room, favorable risk-reward) ・Sell at the upper end of the range, buy at the lower end. Short take profits is short
・Lighten positions before the BoJ announcement
・Ultimately, shorts will win, in my view
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