So the headline news is that the Nikkei jumped 5% will the NZDJPY pair spiked higher after a series of monetary and fiscal policy measures set to be implemented by the BoJ with a main view of dragging the Japanese Economy out of the sapping deflation. Well, in the long run the Yen should weaken and it has already and this offers a ripe buying opportunity for investors alike. One, the issue of QQE with Yield curve control will definitely have the BoJ in control about short and long term interest rates while keeping real interest rates unchanged but in negative territory at -0.1% to spur further economic activity. They also introduced fiscal activity which involved asset repurchases-purchasing of CP, Corporate bonds, ETF and J-Reits. ETF and J-Reits purchases will be increased at an annual pace of 6Trillion Yen and 9B Yen respectively with corporate bonds and CP maintained at previous levels. Of note especially was the fact that the monetary base to GDP ratio is set to be increased to over 100% in the coming year which should be a shot in the arm and the fastest way to spur inflation to over 2% BoJ target. This to me means weakening yen over the medium to long term as further easing kicks in to attain this inflation target with options to cut policy rates further to negative territory, increase monetary base and even the delve into more aggressive asset repurchases. Solid figures for money base target have not been revealed but the thing is, it will be surely increased. There is a provision also for JGB to be purchased on a fixed interest rate and control their respective yields incase BoJ decide to increase their interest rates.
To the charts now and we can see that there is a whip saw as the market analyze this new information and repricing taking place. I have a bullish bias for this pair and I’m looking to buy at the support levels highlighted in the 15 minute chart-attached. That will offer me a good buy opportunity and an early market entry. The safest entry though will be at a break above the 75.0 price level marked in the 4HR chart accompanied by strong break out bar or volume.
For now my plan in the 15 min chart will be as follows:
Buy Limit: 74.00-74.20
SL: 73.50 base of that lower wick
TP: Trail your stops
That’s it for today, make sure you watch out for today’s Crude Oil inventories at 1500 GMT and then later live FOMC statement t 1830 GMT. Be guaranteed, volatility will be there as there is a lot of market expectation about this meeting. They may even cut rates and surprise the markets.
Otherwise have a good trading day.

NZDJPY 4HR Chart-21.09.2016

Source: Dalmas Ngetich

NZDJPY 15 min Chart-21.09.2016

Source: Dalmas Ngetich

NZDJPY Daily Chart-21.09.2016

Source: Dalmas Ngetich

NZDJPY monthly Chart-21.09.2016

Source: Dalmas Ngetich

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