USD/JPY (Weekly) Dual-Trade Trader from 2021 to 2026 (Forex Profit + Swap) retreating after breaking below the 155.22 low?

＜What is Dual-Weapon Trading?＞

From 2021 to 2026 (this year), in the USD/JPY market, a “dual-weapon trading” strategy that earns two types of profits—exchange gains and swap points(not a standard term; it’s a coined term I created inspired by Shohei Ohtani)has been viable.

In particular,from 2021 to 2024,you could buy USD/JPY at the January low and take profit on that position from autumn to year-end, thereby obtaining both exchange gains and swap points.

＜Status of Dual-Weapon Trading from 2021 to 2026 (USD/JPY, weekly)＞

In 2025, buying at the January low was barely safe, butbuying USD/JPY in months other than January—such as a buy(2B) after the early drop or a buy(1B) towards the end—led to larger profits from exchange gains.

In 2026 (this year), if you bought USD/JPY near the January low (152.086), you would still be maintaining an unrealized profit at this point.

buy(1B), buy(2B), and buy(3B) represent small, medium, and large pullbacks, andassuming pullback buys (longs) in USD/JPY at these points,I summarized the current status for each year in the yellow box below, andwe can confirm that in every year there are currently long positions with unrealized gains, and swap points have been earned across years.

＜Position Sizes and Holdings of Dual-Weapon Traders＞

Boxes are drawn at the pullback lows of buy(1B) to buy(3B). From those pullback lows,the capital size of traders who bought the pullback is depicted as the height of each Box, anda filled Box indicates positions that still exist in the market at present (= that amount of money remains in the market and needs to be closed).

Unfilled Boxesindicatethat profits were taken, price returned to that pullback low, and the margin has been returned to the trader.

＜When price returns to the pullback low due to profit-taking on long positions＞

●When long positions are closed and price drops straight downandhits the pullback lows at buy(1B) or buy(2B),observations ofsubsequent price actionshow that:

In case (A),when price falls to buy(1B),themargin equivalent to the height of the light blue Box returns to the trader, sothey use that margin to buy the pullback at a higher time-frame moving average—buy(3B) or buy(1B)and hold positions.

In case (B),after a straight drop to buy(1B) and buy(2B),it appearsthey bought the pullback at the higher-tier buy(3B).

In case (C),after a straight drop to the pullback low at buy(1B),there isa possibility they flipped to short (doten short) using the returned margin. Dual-weapon traders may have been too jittery to act boldly in (A) and (B), butin (C) they were bolder,andthey may have used the returned margin to flip short and push price down to around the black 200 EMA, then employed advanced techniques—using the returned funds to keep price from breaking below the green ③ low while buying pullbacks.

(Itmight simply be profit-taking by traders who went long at the green ③, though…)

Now,regarding the drop from point (D) this time,there are several key points. First,it formed after a lower high at blue ①,andif price breaks below the red ② low (155.221) from here, a blue ① downtrend will form—this is different. Also,in (A), (B), and (C), price rebounded without breaking below the 200 SMA or 200 EMA,butthis time there is a possibility of breaking below the black 200 SMA and 200 EMA,sounlike before, they may not use the returned margin to enter new long positions.

Generally, it’s considered better to take trend-following positions outside the 200 SMA, thereforethe basic approach is to enter pullback shorts (sell), and,unlike short-term timeframes, on the longer-term weekly,many traders may trade long-only without taking short positions,soeven if full margin has returned to hand, they may refrain from short entries and sit out.

＜About the black 200 SMA/200 EMA and downtrends＞

●Focusing on the black 200 MA (200 SMA and 200 EMA),while candles werebelow the 200 MA, downtrends like sell(3S) and sell(1S) formed,butfrom 2021 to the present, when candlesare above the 200 MA,therehas not been a single weekly-level downtrend.

●Currently,the blue ① high (160.390) is lower,and ifcandles break below the red ② low (155.221), a blue ① downtrend (1S) will form for the first time in about six years.

●Then,if a blue ① downtrend forms and candles break below the 200 MA and stay in the zone below the 200 MA,thenbecause candles are below the 200 MA, a downtrend—rather than an uptrend—will likely continue to form.

●If a blue ① downtrend forms and candles break below the 200 MA,thendual-weapon traders will likely take profits while their long positions are still in unrealized gain.

＜About STOP (profit-taking) on long positions with unrealized gains＞

●We can assume all dual-weapon traders currently have unrealized gains,andsince they absolutely don’t want to incur losses, they likely place stop orders so P/L won’t go negative.

(However,since sharp drops in the past still stayed above the black 200 MA and always rose thereafter,there aresome traders who dislike placing stops for fear their longs will be closedand believe price will always come back, so they forgo stop orders to some extent.)

＜Concept of stop orders for profit-taking while in unrealized gains＞

●From the 2021 pullback-low long at the top edge of the light blue Box (107.474),up tothe current 156 yen,there arelong positions with unrealized gains lined up seamlessly from bottom to top,with everyone in profit,so they likelyset stop orders to auto-close at P/L ≥ 0. The right side of the diagram (One year before the XXXX shock) illustrates where these stop orders might be placed.The left side is an image of the stacked long positions one year before the Lehman Shock (about one-quarter the current scale).

●Ifa drop triggered by stops begins,itis highly likely to trigger in a chain,andas profit-taking stops fire one after another without gaps,there is a possibility of a sharp fall driven by profit-taking down to 107.474, with no one incurring losses.

＜Monthly chart shows scale about four times that of the year before the Lehman Shock＞

●The chart is slightly dated as of 8/28,butcomparing the scale of long positionson the monthly chartbetween one year before the Lehman Shock and now,we can confirm it’s about four times (≈4.147x) larger.

●The concernisthe vastly improved computing power enabling far faster execution compared to the Lehman eraandthe scale of accumulated long positions (about 4x).If we assumepositions with stop orders set to auto-take-profit at P/L ≥ 0 are lined up seamlessly from 107.474 to 155.211,thenwe could see a speed and range of movement unprecedented in human experience.

●Traders without stop orders may be saved by forced liquidation,butthose who are indirectly long USD/JPY rather than via FX positionsmaybe unable to react quickly; hours, days, or weeks of delay could lead to catastrophic losses—I’m a bit concerned. Previously,during the Swiss Franc Shock, there were cases where stops didn’t execute properly despite being set, resulting in large margin calls.How will it play out this time? I’m a bit worried.

●Actually,I started FX during the Lehman crash,somy image is FX = short,andI’d prefer if the current uptrend turned into a downtrend,to be honest.

(A drop within an uptrend’s pullbackis lessdramatic than a drop in a downtrend; the latter could be more thrilling. Logically, a drop from long profit-taking might fall faster and farther, so I’d like to see how price actually moves.)

＜If dual-weapon traders coordinate within a wealthy organization＞

●Dual-weapon traderssomehow give the impression ofwealthy,well-capitalized long-only trader groups.If dual-weapon trading is run organizationally or composed of a network of people with massive funds,I worry they might coordinate globally to buy USD/JPY to absolutely prevent a break below the red ② low (155.221), never allowing it to break—a concern,indeed.

(Currently,it looks like they’re turning two descending trendlines into return-move lines for an ironclad defense.)

●For example, after the (C) drop at buy(2B), buy(3B) and buy(2B) came extremely close,andplacing a stop at buy(3B) and entering a long at buy(2B) creates an extremely favorable risk/reward,soif they are consciously engineering this setup,thenthis time,the red ② low (155.221) and last week’s weekly candle’s lower wick tip are extremely close; it’s plausible they went long there and placed a stop just below the red ② low.

●However,if despite the wealthy group’s efforts, price breaks down,thensomeone’s capitulation could spark a sharp plunge,andif stop orders are indeed lined up seamlessly from top to around 107 yen,thenwe could see an extraordinary move.

＜Price action from next week＞

●On the USD/JPY (4-hour) chart,withina move forming an inverted V reversal from the black 200 SMA,we havean inverted V at the blue ① 20 SMA (corresponds to daily 5 SMA),aninverted V at the red ② 50 SMA (corresponds to daily 10 SMA),andan inverted V at the green ③ 100 SMA (corresponds to weekly 5 SMA),which appear likely to occur,andI hope that somewhere in this sequence price will break below the 155.221 low.

＜In closing＞

●Whether price can break below the red ② low (155.221) is the focal point,andunder intense watch,butwill a wave attack break 155.221, or will an ironclad defense hold it? I believe the year’s biggest showdown between dual-weapon traders (longs) and shorts is about to unfold,andI’m thrilled to watch—and perhaps participate—from the best seat at home. :-)

●If the weekly close breaks below the 200 SMA and a decline begins via a chain of profit-taking by dual-weapon traders (falling as it hits the filled-color Box pullback lows one after another), then theoretically we could see speed and range never experienced before—I want to witness such a miraculous move myself!