Sunday, January 13, 2013

Sunday Rock Blog: Fade the Yen Apache

Last October I posted this chart to argue my position in FXY $123 puts:

It turned out to be my best trade of the year as the yen completely collapsed down to $110 recently (from $126).  I think the yen sell off is nearly complete with FXY nearly reaching its ~108.50 measured rule target.  Furthermore, the 14 day RSI hit 10 recently (extremely oversold) and divergences have appeared on the CCI and RSI (foreshadowing a trend change).  I still think the long term bull market in the yen has officially ended, but FXY needs to consolidate the recent decline and the world need to adjust to lower yen exchange rates.  I could see this retracing back to ~$117 in the near future, at which point, new shorts would be of appropriate risk/reward.

Disclosure:  I am long FXY Feb $115 calls.

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