USDJPY Intervention Playbook
How I'd Trade the Next Bank of Japan Yen Intervention
Did you know, it’s been almost a month to the day the Bank of Japan supposedly intervened in the Yen…
And guess what? USDJPY is almost back to exactly where it was…
INTERVENTION
So that’s billions spent, and here we are again. The market is testing that 160 line in the sand… like playing chicken with a central bank…
But how do you trade it? Should you even trade it?
It’s not for everyone, that’s for sure.
But I think there’s an edge.
Here are some ideas…
#1 Aatu Kokkila published his fund’s event research piece on the yen, outlining how they think about the opportunity.
#2 And Adam Linton was on Bloomberg TV talking about the last intervention.
(Both of whom, incidentally, have been on the pod!)
Aatu Kokkila Adam Linton
#3 Finally, if you’re interested, here’s an extract from my Yen intervention playbook I jotted down back in October 2022.
“I have set a line alert on the 1-minute ATR for USDJPY. If price moves 100pips in that candle, I’ll get alerted.
Not perfect, but it will draw my attention to a short, sharp move if I’m at the screens.
Then I will look for price to hold at lows after the first minute, and sell short a small clip right away. Small size, wide stop just to get in. (I will close any other day trade positions that might be open, so I’m not distracted.)
If price exhibits price action similar to last time and in alignment with a potential reprice scenario, I’ll look for small bounces, flags and breakouts, as I normally would in those conditions, to press the trade for more downside. (No rush, let it show its hand, the danger zone is the second clip add, plenty of time if not sure.)
I’ll want to leverage on any unrealised PnL to add more size, targeting a 400pip move minimum from the highs.”
Rough roadmap:
Short any 100 pip move lower in USDJPY in less than 2 minutes Short a 50 pip retracement after a >100pip move lower in < 2 mins
Not advice of course, just sharing my thoughts, and that you don’t necessarily need a comprehensive report to give you a framework…
You make a decision on whether you’ll get involved or not, and outline some boundaries if you do.