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For FX traders: Two trades on the USD/JPY that we telegraphed in the Philochat.
Philochat is the Philoinvestor Community Chat — in case you didn’t know!
You can access it here — although I announced last week that almost all chats will be now behind the paywall after a long period of many free ones.
In this letter we will review two trade setups on the USD/JPY that I wrote about in the Philochat and traded as such.
Trade 1
October 2nd, I went long at 146.75, full position (100% of NAV).
Sold at 149.36 for a 1.8% profit in a few days.
Revised the trade on X after I took profits on the Sunday open.
The Philochat from the day 👇
Trade 2
As you can see from chart of Trade 1 above, I sold too soon.
The trade was touching a profit of 2% on my whole account in a few days and I expected the market to turn back quickly as they would fade the Takaichi Trade — my thoughts on this shared here.
The market continued the move up for a few more days post-result and then hit a wall — prices reversed down 2.5% before finding support on a key level (the yellow range).
The catalyst was the ruling coalition (LDP + Komeito) collapsing and the opposition ramping up to take power from the LDP’s hands. In the end Takaichi managed to close a deal with the JIP and become Prime Minister.
Under normal circumstances I would have entered on the wick (within the red box below) but I was on back-to-back long-haul flights and wasn’t exactly looking for Yen trades at the time…
But flexibility is key for successful trading, I saw the market stay strong and form a continuing formation. I entered on strength and wrote about it on Philochat, this time the thread was behind the paywall so I can’t link it here.
I can however copy it for you 👇
Long USD/JPY - again!
Sanae Takaichi confirmed as Japan’s first female PM after breakthrough coalition deal.
LDP has now JV’d with simililar-ideals JIP party after the former fell out with their long-term coalition partner, Komeito.
JIP is the Japan Innovation Party, a 15-year old “reformist” party..
--> They say Takaichi is an admirer of Margaret Thatcher - also that she plans to spend more on defence and cut some taxes. The coalition agreed on then need to restart Japan’s nuclear reactors which have been shut since 2011 (post-Fukushima).
--> This one is a clear positive for Japan, as cheaper Nuclear Energy will help the economy and shield it from inflationary forces with Imported energy moving up / Yen moving down.
--> What I am fading however is that Takaichi will be a sort of Japanese Thatcher, I see the Takaichi Trade as a weak version of Abenomics - with markets initially responding knee-jerk reaction style but then doubts will start to emerge.
I entered long USD/JPY yen again on news of her election as a catalyst for a Yen repricing downwards.
- BOJ rate increases probably to stall as a consequence of her election
- “Reflation” trade to win the narrative, resulting in downward pressure on the Yen.
The trade is 1% in the money at the time of writing and I will try to ride this trade up to at least 157 Yen to the Dollar.
Philo 🦉
Past Yen trades on Philoinvestor 👇🇯🇵
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