Market Prep: Crypto Selloff: Yen Carry Trade Unwind and Trade Ideas for the Week

$NVDA $FNMA $FNMAS $COIN $BITF $RDDT $ASML $LULU

Hello Traders,

The current crypto selloff is tightly linked to the unwind of the yen carry trade. For years, investors borrowed cheaply in yen to fund investments in higher-yielding, riskier assets, including crypto and U.S. tech.

The Bank of Japan (BOJ) is now signaling rate hikes and an end to its ultra-easy policy. This shift is causing the yen to strengthen and funding costs to rise, triggering a deleveraging (cutting leveraged positions) in risk assets like crypto. The market is effectively front-running a potential BOJ policy change.

Key Factors and Outlook

If the BOJ continues on this path, we anticipate more volatility in carry-sensitive assets, including crypto, high-beta technology stocks, and Emerging Markets (EM).

The BOJ, however, retains tools to inject liquidity and prevent overly tight financial conditions:

• Expanded Bond-Buying or adjusting Yield-Curve Control (YCC) operations.

• Low-Cost Funding Facilities for banks.

• FX Intervention to manage disorderly yen appreciation.

Liquidity Impact

When the BOJ injects liquidity through these methods, it generally loosens global financial conditions. A softer liquidity environment weakens the yen’s surge, stabilizes the carry trade, and reduces deleveraging pressure.

Bitcoin’s sensitivity means it is often one of the first assets hit when funding tightens, but also one of the first to rebound when liquidity is restored. The immediate future for crypto depends on the extent of the BOJ’s rate hikes versus the aggressiveness of its subsequent liquidity support.

SPX Levels

We retested the demand level we posted yesterday, hitting 6,799 before bouncing (our target was 6,794). The market closed with a large indecision candle.

Key Levels Ahead:

• Resistance: Strong cluster at 6,841–6,848.

• Support/Demand: 6,762, and inflection points at 6,674/6,662. A break below these levels is a significant concern.

We ideally look for a bounce here, as we have also retested the trendline breakout. NVDA showed strength today, despite weak overnight markets.

Portfolio Update and Strategy

SLV 0.00%↑ is performing very well, continuing the move from the trade posted last week. We are raising the trailing stop to $51 as a risk management measure.

VSCO 0.00%↑ has gained 25% since our trade idea last Sunday and is maintaining momentum. For those holding, we recommend trailing the stop to $42.

HD 0.00%↑ hit the anticipated supply level and slowed down, as expected. Our target is still 380-400 and we have 400C for May 2026.

Providing these supply and demand levels gives you a clear roadmap to anticipate areas where stocks may slow down, consolidate, or struggle. This will keep you calm and collected. It’s crucial as trading success is ultimately 80% psychology.

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New Names & High-Conviction Trade Ideas for the Upcoming Week

The market is coiled, with liquidity dynamics threatening a major directional move. We have isolated a handful of names positioned for immediate, asymmetrical gains regardless of whether the broader market reverses or finds support.

We are zeroing in on three specific tickers that could deliver a potential strong move in the next trading days, along with the breakout levels you need to know.

Let’s dive in!