Quality Thinking
Trade in Whisky;
With two full weeks passing since the flash crash, we can get a sense of the new market regime. The Yen has bounced slightly, but not by enough. The technical analysts out there will say a 38.2% retracement of the prior fall is essential to demonstrate a change in trend. That would mean GBP-JPY moves above 192.50, and it hasn’t. Instead, it is below its 30- and 200-day moving averages, which need to be broken before we should assume the unwinding of the carry trade is over.
Sterling vs Yen Stalls at Resistance
This chart is an important one to follow (or USD-JPY). It doesn’t necessarily mean market mayhem because the unwinding of the yen (yen goes up) is now a known risk, which means help is at hand. We mustn’t panic until it’s time because problems could be buried for months or even years, as we don’t know how willing the authorities are to keep the market cogs fully greased.
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