The If, When, How of the BoJ intervention
As the Yen continues to weaken, the market consensus is that the BoJ is most likely to intervene when the price hits the round number level of 150.
Understanding the previous time the BoJ intervened (non stealth) on 22nd September 2022, there are a few learning points to note:
- The market consensus price level then was 145. However, the BoJ intervened only when the USDJPY climbed to reach 145.90. (Noteworthy: A hard and fast number probably isn't what the BoJ is paying attention to, OR market consensus is generally wrong)
- The BoJ is deemed to have intervened (stealth) twice more since the 22nd September 2022 (13th & 18th October). But these saw lesser price volatility and were quickly and easily reversed. (Noteworthy: Stealth intervention doesn't seem to work well)
- The BoJ intervention on 22nd September was after the BoJ policy report and the actions were announced by the BoJ. (Noteworthy: The next BoJ policy report is soon! On the 28th October)
How to prepare and take advantage of a BoJ intervention?
- Utilise a sell stop pending order.
- Judging from the previous intervention which had more than 500pip move and almost no whipsaw; you could apply the pending order below the round number level (in this case, below 149)
- And if the price continues to climb, just shift the order up accordingly.
- However, always ensure that you have a StopLoss: approximately 45 pips and a TakeProfit: of at least 200 pips which would allow you to have a very good R:R.
Understanding the previous time the BoJ intervened (non stealth) on 22nd September 2022, there are a few learning points to note:
- The market consensus price level then was 145. However, the BoJ intervened only when the USDJPY climbed to reach 145.90. (Noteworthy: A hard and fast number probably isn't what the BoJ is paying attention to, OR market consensus is generally wrong)
- The BoJ is deemed to have intervened (stealth) twice more since the 22nd September 2022 (13th & 18th October). But these saw lesser price volatility and were quickly and easily reversed. (Noteworthy: Stealth intervention doesn't seem to work well)
- The BoJ intervention on 22nd September was after the BoJ policy report and the actions were announced by the BoJ. (Noteworthy: The next BoJ policy report is soon! On the 28th October)
How to prepare and take advantage of a BoJ intervention?
- Utilise a sell stop pending order.
- Judging from the previous intervention which had more than 500pip move and almost no whipsaw; you could apply the pending order below the round number level (in this case, below 149)
- And if the price continues to climb, just shift the order up accordingly.
- However, always ensure that you have a StopLoss: approximately 45 pips and a TakeProfit: of at least 200 pips which would allow you to have a very good R:R.
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