Trade Idea Citi calling USDJPY range bound ahead of BoJ, where are the key levels you guys are playing?

[Pivot Point]

Just saw Citi put out a note expecting USDJPY to stay pretty locked in a range heading into the upcoming BoJ rate decision. NGL, looking at the daily charts, it feels like we’ve been grinding through some brutal chop lately and the order flow is super hesitant. Every time we try to push up towards the upper boundaries, intervention chatter or heavy seller interest knocks it right back down, but the downside dips keep getting caught by buyers pretty fast.

I'm trying to figure out if it's even worth scalping the edges of this range right now or if we are just setting up for a massive liquidity sweep on both ends once the BoJ actually releases their statement. If this chop holds up, are you guys playing the ping-pong game between local support and resistance, or are you sitting on your hands until we get a clean break of structure?

 

[JulianCraft]

Citi saying "range bound" is just code for them not wanting to admit they're terrified of the BoJ actually doing something for once. Honestly, I wouldn't touch this pair with a ten-foot pole right now. We're still living in a fantasy land where everyone thinks the Fed is going to pivot, but with core inflation still sticky as glue, Powell is going to have to keep the hammer down. If the BoJ finally blinks, the carry trade unwinds and the yen is going to go ballistic. I'm staying short USD/JPY but my stop is tight because this market is completely disconnected from reality.

 

[Noah Vance BR]

[QUOTE="JulianCraft, post: 4356]If the BoJ finally blinks, the carry trade unwinds and the yen is going to go ballistic. I'm staying short USD/JPY but my stop is tight[/QUOTE]

Spot on with the carry trade risk, Julian, but man, trying to stay short right here feels like playing Russian roulette with a fully loaded mag. The R:R just doesn't justify a short entry for me when the downside is a liquidity vacuum if Ueda actually surprises us. I'm sitting on my hands until we get a daily close outside the 150-155 range. Let the macro tourists blow their accounts first.

 

[Zakami Ng]

[QUOTE="Noah Vance BR, post: 4360]I'm sitting on my hands until we get a daily close outside the 150-155 range.[/QUOTE]

Smart play @Noah Vance BR. Looking at the charts, there's a pretty nasty 4H bearish RSI divergence building up near 154.50, but the daily MACD is still sitting flat right above the zero line with zero conviction either way.

I'm definitely seeing the downside setup technically, but until I get a clean MACD bearish crossover on the daily, jumping in early is just asking to get whipped out by BoJ headlines. Keeping my eyes on 150.20 for support if we break down.

 

[Mason Brooks]

[QUOTE="JulianCraft, post: 4356]I'm staying short USD/JPY but my stop is tight because this market is completely disconnected from reality.[/QUOTE]

Holding a tight stop into a BoJ rate decision is absolute suicide man. Spread expansion alone is going to hunt that down and slip you for another 30 pips on top of it.

If you're dead set on shorting here, you should be cutting your position size down to a fraction of a percent so you can actually afford a wide stop above 155.50. Tight stops in low-liquidity event risk just hand free money to the market makers. I'm with @Noah Vance BR on this one—position sizing zero is the best play until the dust settles.