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Citi Warns Time To Get Defensive On USDJPY
With today's shenanigans in USDJPY focusing everyone's attention on the nation's collapsing currency, Citi's FX Technicals group suggests it could perhaps be time to fade the trend and fight the consensus in the near-term.
There are a few reasons why it is time to get a little defensive on USDJPY in the near term.
– The low to high move so far is very similar to that seen in 1995-1997 before we saw a squeeze lower. We would not expect a squeeze of that magnitude (17 big figures) as this is not a trend that has the same magnitude of participation (particularly domestic) and we do not have the same leveraged yield structure and mature Fed tightening cycle as we had then.
– As we approached December 2013 and traded above 105 (105.44 on 02 January) we then saw a squeeze to 100.76.
– Prior to that we peaked just shy of 100 (99.95 on 11 April 2013) before we saw a squeeze to 95.80
– We also trade just above 110 (110.09 on 01 October) before a squeeze to 105.23.
– At 115 we pretty much “bypassed” the squeeze going only from 115.59 to 113.86- but we did squeeze sharply off every other “5 big figure” increment since 100
So a squeeze in the near future (Dec into early January) back towards 115 again does not look unreasonable.
In addition we are as overbought on the monthly chart as we were when we saw that 1997 squeeze as well as another squeeze in December 2005. We also saw some minor squeezes from a similar price dynamic in 2001-2002
Bottom line: we still like the medium term USDJPY trade. We still think 130-140 is possible in the next 12-18 months. We still think a change in Fed policy will contribute to this. However, for now, we think that levels closer to 115 could provide a buying opportunity in the weeks ahead.
Source: Citi
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my eye on china
if they devalue ... Katy bar the door
Citi says "get defensive, buy stuff that's proven to safely store wealth for over 6,000 years".
Oh, wait.
The fact is that Japan is about to inflate their way out of there own debt crisis before anyone else gets a chance to do it. Holding JPY is just a horrible error.
Anybody fuck this up gonna get free passes to the new Bammy-Mike romance movie in the works.
assholes surrounded by assholes
If the yen ever sees 115 again, I will blow Yellen.
usdcyn, http://forex.tradingcharts.com/chart/US%20Dollar_Chinese%20Yuan%20Renmin...
Citi. You mean the company whose stock cratered to Dollar Bargain store levels just six years ago?
Okay. Whatever.
Holy crap!!! Get ready for a MONSTER move higher.
You go that right!
shitty group
our friend kyle bass seems to think this goes to the 250's
that puts the s&p at, what? like 50k?
"In the near term."
Well, it better be near-term because there is no long term.
... we do not have the same leveraged yield structure and mature Fed tightening cycle as we had then.
yep. We didn't have a policy to create a gazillion yen either. Maybe the yen is no longer circling the bowl and has now entered the vortex.
What about the 123 line in the sand? It is getting close!
Yeah, that's what I was thinking too. So 123 really isn't a 'line' any more? That was so "November", huh?
not this time
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The attack on Sony is the rabbit hole.. :)
It's not just a weak yen it's a dollar on the rise, and the Fed's going to give it a good kick before the buying spree.
time to sell bank stocks more like. to the fazmobile!
I'm refershing the USD/JPY google search like an American trying to get lower prices on cyber monday.
The best defense, is to do exactly the opposite of the recommendation of a major bank.
This is the kind of junk analysis that gets people in trouble. Short the runaway train because of a short stochastic?? F**king childish at best!
The only options here are 1) Hold, 2) take profit or move a stop loss closer to the spot.
Buy on dips, buy on dips... Sleep easy.
www.investfts.blogspot.co.uk
At least throw RSI in there, for correlation.
Shoulda warned that ol boy that got the Columbian necktie.
No dead bankers for weeks now? It's all good,right?
If citi is saying sell, its time to BUY!!