Dollar/yen rebounds significantly as expected. But I’m not aiming for the lowest price update.

Dollar/Yen has retraced.

From the point it plunged into the 155 yen range, it has moved up to the 157 yen range.

Earlier I wrote that it would “rebound for a while,” so the move was as expected.

And in these two days, both long and short positions could be taken.

But now, the main point begins.

I will not aim for the next low after this.

I will write the reasons.

It’s normal to return after a drop of 8 yen

First, let’s整理 what happened.

Dollar/Yen, from the high around the 164 yen area, was sold all the way down to the 155 yen range.

In terms of price range, about 8 yen.

For several daily candles to move this much is quite significant.

And now, it has retraced to the 157 yen range.

This retracement itself isn’t anything special.

After a one-sided selloff, positions skew toward selling. That skew will eventually be resolved. When it resolves, prices move back.

There is no market that continues to drop in a straight line.

That’s why one could read that a rebound would come. It wasn’t that I hit the mark so much as the shape made it likely.

In two days, both long and short positions could be taken

In this situation, I think it was good not to fix the direction.

I took short in the falling phase, and long in the rebound.

If I had insisted, “I’m bearish,” I wouldn’t have captured the rebound's rise. On the contrary, I might have chased the drop and gotten hurt by the rebound.

The viewpoint and the positions I take now are separate things.

Just because the big picture is downward doesn’t mean you always have to keep selling.

If you know a pullback is coming, you should buy there.

Whether you can separate these can change the outcomes even with the same market view.

From here, I’m thinking about selling on rallies

So what next?

I’m thinking of placing some selling on rallies for a while.

The overall direction is still viewed as down. If that’s the case, the retracement level becomes a selling opportunity.

There’s a big difference between selling near the bottom right after a sharp drop and selling near a retracement.

The stop loss range and the potential gain range change.

If you’re chasing the same direction, you should choose the better conditions. It’s natural.

Waiting for a rebound to sell. That is the basic approach.

However, I view this month’s new low as unlikely

This is the core of today.

I am considering selling on rallies. But with that short, I don’t intend to go for lower lows.

The reason is simple:I think the downward energy has been exhausted once.

It dropped 8 yen. It has moved a considerable distance in a short period.

After moves like this, it’s rare to continue in the same direction immediately. It takes time to settle the drop. For a while it tends to roam up and down, entering a phase of rebuilding energy.

Therefore, I honestly see it as difficult to push to lower lows within this week or month.

In other words, my rally-selling isn’t about trying to take a big lower low with a short.

It’s only a short aimed at taking a portion of the rebound.

The target width and the holding time are initially planned to be short.

If you misunderstand this, it’s dangerous. If you hold long with a large bearish bias, you’ll carry a drawdown in a market that doesn’t break lower.

When you book profits on the short, you rotate to long

And then beyond that.

When I book profits on the short, I envision rotating into long positions.

I see the retracement force becoming stronger after a pause.

You might think, “You were selling just a moment ago, now you’re buying?”

That’s right.

I don’t swear loyalty to the market.

What I thought was down and what I buy now aren’t contradictory.

They’re just on different timeframes.

The big picture is down. But the near term is a retracement. Therefore, near term I buy.

If you can’t do this, you’ll see money decrease even when you forecast the direction correctly.

The moment you fix the direction, losses begin

The riskiest part in this moment is to lock yourself into a “I’m bearish” mindset.

Once fixed, you get this outcome.

・Cannot buy on the retracement
・Or buy on the retracement and get hurt
・Hope for lower and hold in a market that doesn’t update lower
・Drawdown grows and you can’t cut

Even with the correct direction, your account balance declines.

In the past, I emptied two accounts because of this.

So now I don’t fix a scenario.

・Enter a rally-selling
・But don’t expect new lows
・Take profits when you can
・Then rotate to long

Holding this approach a bit more flexibly ends up yielding results.

Of course, expectations can be wrong. If the rally-selling breaks to the upside, exit short then. If it breaks to the downside, revise the scenario.

What you need to decide is only where you will admit you were wrong.

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