USD/JPY Dollar-Yen | “This Could Be the Trade of the Decade” Says the Best Trader I Know

dollar yen

“This could be the trade of the decade, and I am looking to risk several hundred points to make thousands over the next few years”, the best trader I know told me yesterday.

Kevin Burton, whom you may have met at our Leading Trader webinars, is the best currency trader I know… and that was a huge statement from Kevin.

Today the Wall Street Journal reported that Japan has just entered a “bear market”. The dollar fell against the yen (USD/JPY) and Japanese stocks plunged.

I asked Kevin to join me for a quick telephone interview for my subscribers here at Leading Trader. And here’s what he said…

Here is a transcript of the rest of our conversation yesterday:

Kevin Burton:
I’ve been interested in the Dollar-Yen (USD/JPY) for some time now. It’s had a fantastic run. I’ve been waiting patiently for it to pull back. Just like most trend based traders, I’ve been waiting for it to pull back to identify ideal entry points (rather than just try and get in at higher prices). I think we are in the early stages of that “pullback” now, so it is getting interesting. I do think there’s a multi-month, maybe even a multi-year trade coming.

Alessio Rastani:
Yes, I was watching this last week when USD/JPY came to its 21 weekly moving average. Did you think it would hold support there, or did you think it would go past that level? I actually thought that USD/JPY would hold support there for a potential “buy” (see chart):

weekly usdjpy

Kevin:
I did think that it could probably bounce from there (the 21 EMA) at the first test of that level. But it wasn’t the area that I was looking to get long or “buy” for myself. I was looking for a slightly lower price to buy. We are not that far away now. Probably only a couple of hundred pips (points) from here – at around the 92 to 93 ¬•en range.

Alessio:
Is that where you’re looking to see the USD/JPY go to?

Kevin:
Well… that is where I am looking to buy it!

(We both laugh)

Kevin continues:
I wouldn’t necessarily trade it down to that level (92 Yen). But that is certainly an area that I am looking to buy it. It is around the 92 to 92.50 yen level.

Alessio:
Is that based on a technical level you’re using?

Kevin:
Yes it is a moving level that I am looking at. For example, if we are taking this trade on a monthly chart of the USD/JPY… (see below chart):

monthly usdjpy

Kevin continues:
Depending on the volatility I have to use a stop-loss of hundreds of points.

Alessio:
Very good. So you’re using quite a wide stop?

Kevin:
Yes, and you need to. On a monthly chart the range is much bigger and so you have to accept bigger stop-losses. So you need to downsize your position (leverage) accordingly. So even if you’re risking several hundred pips (points) of stop-loss, the position is so small that even if I was to get stopped out, it wouldn’t be much.

Alessio:
I agree. What you say is true. The USD/JPY is making a decent correction and I think we both agree that this is a “buy” opportunity. We’re both looking to buy this. And I assume you’re not worried either about all this stuff in the background about interest rates…? You’re essentially bullish long term?

Kevin:
Yes I am at the moment, obviously until I’m proven wrong. I mean the thing with markets is that there will always be a news event that will accompany a correction at that time. For example, at the time the yen was at 102, I said to my own traders that by the time the yen does pull back there will be some fundamental news story that will come out to throw traders off. You have to be aware of that otherwise it will affect your decision making.

Alessio:
Exactly. That is well said.

Kevin:
Yes, and if the trade works out, while I am risking several hundred pips (points) I am looking to make thousands… potentially thousands of points! Because I am basing this off the monthly charts, that could take another couple of months to set up. And as far as profits are concerned, that could take many months, perhaps years, to see itself through. It’s one of those “trade of the decade” type trades.

Alessio:
Do you see 120 Yen as a good target?

Kevin:
I am looking at that yes, and I think potentially even beyond that. Much higher prices.

Alessio:
Yes and I would agree with you on that. What do you make of George Soros saying recently that he is returning to short the yen – in other words to buy the USD/JPY?

Kevin:
Well I guess it helps!

(We both laugh again)

Kevin continues:
Yes I guess that could help if you have someone like that out there. At the moment I am not too fussed about what other people are doing, but fundamentally I do think that there is a big trade coming…

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Alessio Rastani is a stock and forex trader at www.leadingtrader.com .

One Comment

  1. Im looking to but at support level around 80-85

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