It would be fair to assume that carry trades (JPY) were too high anyway, right? Wrong! In actual fact the carry trades as they are called are at multi year lows! For the last 17 years the USD/JPY has consolidated in the form of the infamous symmetrical triangle. It is bearish, but will break to the upside before resuming the downtrend. The next long entry on Yen pairings is looming. It has the potential to be a very profitable one. Read on...

When the Dow Jones reaches 12,894 the USD/JPY will be priced at approx 110.95. Take a look at the 30 year USD/JPY daily chart below. The pair are making their way towards multi year support at approx 110.50. We are fully expecting the carry trades to push higher (180.00 - 200.00) before possibly resuming the long term down trend. This type of trade would be a long term investment (3-4 years) with very minimal risk. The rewards, however, will be substantial. Not only will we profit in stake per pip but also in premium interest for holding long JPY. The reason behind carry trades... High interest rates. For such a small investment with minimum risk will make all Yen pairings very attractive long term trades.

If the Dow fails to hold 12,894 then all eyes are on the most recent low of 12,528, a break of which would signify a potential major trend reversal as the decline from 14,000 would be in 5 waves down. This would mean a correction to 50-60% of such decline would be expected (A-B-C) before continuing lower. This scenario would most certainly see the USD/JPY break from the triangle and meet with the phsychological 100.00 barrier.