Carry Trade – Monthly Analysis
In this update, we take a closer look at the evolving dynamics of the carry trade. We analyze the technical patterns behind the latest move, assess how the risk–reward balance is shifting, and outline the scenarios that could shape the next phase.
CANDLES
Friday changed the picture materially. The daily reclaimed the 100 DMA and confirmed a bottom, the 2-day frame printed a Bullish Engulfing, and the weekly formed a Dragonfly Doji—mirroring the reversal seen in the U.S. Dollar Index itself. On the monthly, what began as a super-strong Bearish Engulfing softened into a weaker formation that now requires confirmation, while key supports and technicals remain intact.
The carry trade remains healthy following the annual close, reinforcing the view that the recent slump has likely run its course and that the Dollar is resuming strength. Technicals continue to favor USD over JPY: the Dollar is advancing against the Yen toward levels not seen since 1986, and the long-term trend remains bullish until confirmed otherwise.
ELLIOTT WAVES
The long-term targets for the USD/JPY pair remain intact.
The long-term targets for the USD/JPY pair remain intact. The structure continues to develop as a healthy impulsive wave, marked as wave 5 of III. The roadmap outlined back in July remains valid, and price action has so far tracked that projection very closely.
Summary
The carry trade remains technically healthy. With trends intact and no adverse signals from either indicators or candlestick structures, control remains firmly with the carry trade until proven otherwise.
Happy Trading!
