Commodity Chart Of The Day: Yen

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Commodity Chart Of The Day

Daily Japanese Yen

(click image to enlarge)

Risk off is very evident, with stocks and commodities getting hit hard in today's session. Where the money is flowing as of this post is into the U.S. dollar and Treasuries. A bullish engulfing candle in the greenback, and if this rally can hold at two month highs, we should grind higher. Similar performance in both 30-year bonds and 10-year notes, with bullish engulfing candles lifting prices to their highest in weeks as well. 134'00 should be challenged in 10-year notes, while a trade above 151'00 is expected in 30-year bonds. I'd be interested in establishing bearish plays from higher levels.

Back to the JY…I expect an inverse relationship to risk assets to play out. By no stretch of the imagination am I anticipating a 2008-like meltdown, but we could see pressure short term. To have some skin in the game but without massive exposure, I prefer options as opposed to futures. As seen on the chart above, December futures have completed a 50% Fibonacci retracement, and it appears we could get a bounce from oversold levels. A settlement above the down sloping trend line is needed for confirmation. There is an endless combination of option spreads or outrights that I can recommend. The bottom line: set up a trade trying to capitalize on a trade to 1.2750/1.2800 in the coming weeks.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.