Well done to those short the USD/JPY!
Posted in our weekly market insight
USD/JPY:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern (118.66/104.62). February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into the month’s end.
March, so far, breached the lower edge of the descending triangle, yet has recovered in reasonably strong fashion, leaving nearby demand at 96.41/100.81 unchallenged. Note current action trades in the shape of a hammer candlestick signal.
Daily timeframe:
Despite the week showing some resilience off 105.57/106.17 as a demand-turned supply zone, Friday observed a resurgence of bidding take hold that breached not only 105.57/106.17, but also another demand-turned supply at 106.60/107.09.
The move saw the action address a 61.8% Fib retracement at 108.02 and 200-day SMA, currently circulating around 108.25. Continued bidding this week has demand-turned supply at 110.10/109.52 in view. This is a significant area knowing it is the origin of the move to highs at 112.22 and the decision point to cross above the 110.29 January 17th high.
H4 timeframe:
Friday navigating higher ground produced the final D-leg to an AB=CD bearish pattern, terminating around 108.08. Note for this pattern to remain valid, the 161.8% Fib ext. at 108.90 must remain intact. Traditional take-profit targets associated with AB=CD formations generally reside around the 38.2% and 61.8% Fib retracement levels of legs A-D – in this case, at 105.67 and 103.93.
H1 timeframe:
Supply at 108.89/108.50 made a showing in the later stages of Friday’s upside move, after whipsawing through channel resistance (105.91). The two combined likely appeals to price-action based traders, with 107 set as a logical downside target on this timeframe, assuming we take out 108. Also of note is the RSI indicator nudging its way into overbought levels, holding off peaks at 78.00.
Structures of Interest:
Longer term:
Scope to advance this week is visible on the monthly timeframe, though involves overthrowing the 61.8% Fib retracement at 108.02 and 200-day SMA on the daily timeframe.
Shorter term:
The combination of daily resistance highlighted above, the H4 AB=CD bearish configuration and H1 action fading supply at 108.89/108.50 as well as a channel resistance (yellow), could weigh on prices this week and draw in the top edge of daily demand at 107.09, followed by the 107 handle on the H1 timeframe.
Conservative sellers may wait for a decisive H1 close south of 108 to be seen before committing.
USD/JPY:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern (118.66/104.62). February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into the month’s end.
March, so far, breached the lower edge of the descending triangle, yet has recovered in reasonably strong fashion, leaving nearby demand at 96.41/100.81 unchallenged. Note current action trades in the shape of a hammer candlestick signal.
Daily timeframe:
Despite the week showing some resilience off 105.57/106.17 as a demand-turned supply zone, Friday observed a resurgence of bidding take hold that breached not only 105.57/106.17, but also another demand-turned supply at 106.60/107.09.
The move saw the action address a 61.8% Fib retracement at 108.02 and 200-day SMA, currently circulating around 108.25. Continued bidding this week has demand-turned supply at 110.10/109.52 in view. This is a significant area knowing it is the origin of the move to highs at 112.22 and the decision point to cross above the 110.29 January 17th high.
H4 timeframe:
Friday navigating higher ground produced the final D-leg to an AB=CD bearish pattern, terminating around 108.08. Note for this pattern to remain valid, the 161.8% Fib ext. at 108.90 must remain intact. Traditional take-profit targets associated with AB=CD formations generally reside around the 38.2% and 61.8% Fib retracement levels of legs A-D – in this case, at 105.67 and 103.93.
H1 timeframe:
Supply at 108.89/108.50 made a showing in the later stages of Friday’s upside move, after whipsawing through channel resistance (105.91). The two combined likely appeals to price-action based traders, with 107 set as a logical downside target on this timeframe, assuming we take out 108. Also of note is the RSI indicator nudging its way into overbought levels, holding off peaks at 78.00.
Structures of Interest:
Longer term:
Scope to advance this week is visible on the monthly timeframe, though involves overthrowing the 61.8% Fib retracement at 108.02 and 200-day SMA on the daily timeframe.
Shorter term:
The combination of daily resistance highlighted above, the H4 AB=CD bearish configuration and H1 action fading supply at 108.89/108.50 as well as a channel resistance (yellow), could weigh on prices this week and draw in the top edge of daily demand at 107.09, followed by the 107 handle on the H1 timeframe.
Conservative sellers may wait for a decisive H1 close south of 108 to be seen before committing.
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