USD/JPY longs have been the best trade in a long time. It’s been a fast-moving trend with only limited pullbacks.
The US dollar was the top performer once again this week while the yen lagged.
Performance versus US dollar
On the weekly chart, the pair has gone parabolic since the Bank of Japan decision at the end of October.
USDJPY weekly chart
It’s a simple chart with a clear target at 123.95 but it’s painfully difficult to recommend buying it at these levels for anything more than a few hours.
The daily RSI is at 82, the weekly at 85 and the monthly at an all-time high of 84. In some ways it’s the perfect confluence of events with the US economy picking up, the Fed shifting toward tightening at the same time as the BOJ hitting the panic button but the risk of a reversal is simply becoming too high — or maybe we can squeeze out one more week of gains.