Thoughts on the USD/JPY - possible longs above 108.78.
Weekly gain/loss: -1.98%
Weekly closing price: 108.58
The USD/JPY suffered additional loss last week, wiping away 223 pips in value, or nearly 2%.Thanks to this latest bout of selling, weekly movement is seen trading within a reasonable distance of a weekly trendline support taken from the low 98.78, followed closely by a weekly support area at 105.19-107.54.
Turning our attention to the daily timeframe, daily support at 108.78 experienced a minor breach on Friday after the pair produced a daily bearish engulfing candle. While this is considered a bearish cue, other key points to note here is the daily Quasimodo support seen just beneath at 108.26 which happens to be bolstered by the top edge of the weekly support area registered at 107.54 (low of the daily Quasimodo support comes in at 107.31).
H4 price failed to sustain gains beyond the H4 mid-level resistance at 109.50 on Friday, and consequently fell sharply on the back of Gov. Kuroda’s comments at the World Economic Forum in Davos. 109, as you can see, was quickly removed, leaving H4 price free to whipsaw through the H4 mid-level support at 108.50 into the close.
Market direction:
Sellers’ stop-loss orders have likely been filled below 108.50, as have breakout sellers’ sell orders. Together, these orders provide traders liquidity to buy. And, as we have recently seen price come within an inch of the aforementioned daily Quasimodo support that’s bolstered by a weekly support area at 105.19-107.54, a recovery may be on the cards.
Although a move higher is feasible, it does not come without opposition. Nearby we have the recently engulfed daily support-turned resistance at 108.78 to contend with, as well as the fact that weekly price shows space to stretch a little lower. Therefore, to confirm a bullish reversal from 108.26, we would need to witness a decisive DAILY close above the daily resistance 108.78. Selling, on the other hand, is out of the question as far as we can see. Selling into a daily Quasimodo, and then the top edge of a weekly support area/weekly trendline support, is not a trade with high odds, in our opinion, despite a down trending market.
Data points to consider: US core PCE price index m/m at 1.30pm GMT.
Weekly closing price: 108.58
The USD/JPY suffered additional loss last week, wiping away 223 pips in value, or nearly 2%.Thanks to this latest bout of selling, weekly movement is seen trading within a reasonable distance of a weekly trendline support taken from the low 98.78, followed closely by a weekly support area at 105.19-107.54.
Turning our attention to the daily timeframe, daily support at 108.78 experienced a minor breach on Friday after the pair produced a daily bearish engulfing candle. While this is considered a bearish cue, other key points to note here is the daily Quasimodo support seen just beneath at 108.26 which happens to be bolstered by the top edge of the weekly support area registered at 107.54 (low of the daily Quasimodo support comes in at 107.31).
H4 price failed to sustain gains beyond the H4 mid-level resistance at 109.50 on Friday, and consequently fell sharply on the back of Gov. Kuroda’s comments at the World Economic Forum in Davos. 109, as you can see, was quickly removed, leaving H4 price free to whipsaw through the H4 mid-level support at 108.50 into the close.
Market direction:
Sellers’ stop-loss orders have likely been filled below 108.50, as have breakout sellers’ sell orders. Together, these orders provide traders liquidity to buy. And, as we have recently seen price come within an inch of the aforementioned daily Quasimodo support that’s bolstered by a weekly support area at 105.19-107.54, a recovery may be on the cards.
Although a move higher is feasible, it does not come without opposition. Nearby we have the recently engulfed daily support-turned resistance at 108.78 to contend with, as well as the fact that weekly price shows space to stretch a little lower. Therefore, to confirm a bullish reversal from 108.26, we would need to witness a decisive DAILY close above the daily resistance 108.78. Selling, on the other hand, is out of the question as far as we can see. Selling into a daily Quasimodo, and then the top edge of a weekly support area/weekly trendline support, is not a trade with high odds, in our opinion, despite a down trending market.
Data points to consider: US core PCE price index m/m at 1.30pm GMT.
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