Anyone feel the USD/JPY is ready for a recovery???
USD/JPY:
A broadly weaker dollar as well as US equities falling sharply Thursday weighed considerably on the USD/JPY. The market declined in excess of 1.00% yesterday, carrying its total weekly loss to 1.91% thus far.
Weekly price action, as you can see, washed through orders at its 2018 yearly opening level drawn from 112.65, pulling the unit into the walls of a demand zone coming in at 110.38-111.48. This area managed to deliver support back in late October, therefore history may repeat itself.
Lower down on the curve, daily movement overthrew two key supports at 112.11 and 111.62 yesterday, both now acting resistances. According to structure, further selling is a possibility on this scale, with the next area of support not expected to emerge until we reach the Quasimodo formation plotted at 110.68.
In the shape of four dominant H4 bearish candles, the unit cleared 112 off the shelf and tested its 111 handle. While price established support off this number at the closing stages of the day, consequently producing a nice-looking H4 bullish pin-bar formation, the research team notes to be cautious given the daily Quasimodo support seen lurking just south of this number at 110.68.
Areas of consideration:
Entering long on the back of the recent H4 bullish pin-bar formation is chancy for two reasons. Firstly, risk/reward considerations are skewed: an entry at 111.27 with a stop-loss order positioned at 110.80 (beyond the candlestick’s tail), along with an initial take-profit target set at daily resistance 111.62 offers less than a 1:1 ratio. Secondly, there’s a strong chance the market may observe an additional run on stops beneath 111 to bring in daily buyers from the daily Quasimodo support mentioned above at 110.68.
With the above in mind, traders are urged to wait and see if H4 price drives through 111 and challenges 110.68 before engaging with this market. A test of 110.68 in the shape of a reasonably strong H4 bullish close back above 111 would, according to the overall technical picture (remember weekly price is now trading within demand), likely be enough to draw in buyers towards the noted daily resistance.
Today’s data points: US Core Durable Goods Orders m/m; US Final GDP q/q; US Durable Goods Orders m/m; US Core PCE Price Index m/m; US Personal Spending m/m; US Revised UoM Consumer Sentiment.
A broadly weaker dollar as well as US equities falling sharply Thursday weighed considerably on the USD/JPY. The market declined in excess of 1.00% yesterday, carrying its total weekly loss to 1.91% thus far.
Weekly price action, as you can see, washed through orders at its 2018 yearly opening level drawn from 112.65, pulling the unit into the walls of a demand zone coming in at 110.38-111.48. This area managed to deliver support back in late October, therefore history may repeat itself.
Lower down on the curve, daily movement overthrew two key supports at 112.11 and 111.62 yesterday, both now acting resistances. According to structure, further selling is a possibility on this scale, with the next area of support not expected to emerge until we reach the Quasimodo formation plotted at 110.68.
In the shape of four dominant H4 bearish candles, the unit cleared 112 off the shelf and tested its 111 handle. While price established support off this number at the closing stages of the day, consequently producing a nice-looking H4 bullish pin-bar formation, the research team notes to be cautious given the daily Quasimodo support seen lurking just south of this number at 110.68.
Areas of consideration:
Entering long on the back of the recent H4 bullish pin-bar formation is chancy for two reasons. Firstly, risk/reward considerations are skewed: an entry at 111.27 with a stop-loss order positioned at 110.80 (beyond the candlestick’s tail), along with an initial take-profit target set at daily resistance 111.62 offers less than a 1:1 ratio. Secondly, there’s a strong chance the market may observe an additional run on stops beneath 111 to bring in daily buyers from the daily Quasimodo support mentioned above at 110.68.
With the above in mind, traders are urged to wait and see if H4 price drives through 111 and challenges 110.68 before engaging with this market. A test of 110.68 in the shape of a reasonably strong H4 bullish close back above 111 would, according to the overall technical picture (remember weekly price is now trading within demand), likely be enough to draw in buyers towards the noted daily resistance.
Today’s data points: US Core Durable Goods Orders m/m; US Final GDP q/q; US Durable Goods Orders m/m; US Core PCE Price Index m/m; US Personal Spending m/m; US Revised UoM Consumer Sentiment.
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