Futures markets are pretty quiet Monday morning.
Scanning the markets, dollar/yen (USD/JPY) jumps out as one that’s at a key juncture that could warrant a position trade. The currency pair has been trending sideways since peaking in May. So the question is whether the sideways period is a pause within the larger uptrend or a top.
Odds favor a resolution higher. The consolidation evolved in the form of a symmetrical triangle. These usually act as continuation patterns, meaning the trend that preceded the pattern ultimately resumes. Given the duration of the triangle, upside potential is substantial. One way to estimate upside potential is to draw a parallel line to the lower barrier and apply it to the first high. I’ve done that with the red line on the chart. You can see that, depending on how fast price rises, the region of 110 is a reasonable estimate in the intermediate term.
Selling short FXY (CurrencyShares Japanese Yen) provides a way to trade the yen through exchange traded products. Going long YCS (ProShares UltraShort Yen) is a way to add leverage to the trade.
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