We see no alternative but to remain flat in this market...
With the dollar recently losing ground against most of its traded pairs (see the US dollar index), it was no surprise to see the USD/JPY follow suit. Following an aggressive two-(H4) candle whipsaw through a H4 trendline taken from the high 118.40, the unit crashed below both January’s opening level at 116.97 and nearby psychological band 117. This, as can be seen from the chart, only intensified selling momentum from thereon bringing price down to the 116 handle going into the London close.
While the buyers and sellers slug it out around the 116 band, it’s our job to decide on the next probable move! Looking at the H4, a close below 116 would likely place the H4 demand at 114.77-115.18 in the firing range. Still, let’s be mindful to the fact that weekly action is trading from a weekly support at 116.08, as well as daily price lurking within shouting distance of a daily demand base seen at 114.73-115.47.
Our suggestions: Direction, at least for the time being, is a little foggy. With the above (rather risky) short setup in mind, let’s take a look at why longs from 116 are also problematic. A buy from 116 is appealing given its connection to weekly support at 116.08, but there’s a palpable risk of a fakeout through 1.06 being seen down to the top edge of daily demand at 115.47. By the same token, a sell on a close below 1.06 as we highlighted in the above paragraph, not only places one in a challenging position concerning risk/reward in that daily demand sits close by, it is also a huge risk to sell here when we’re sailing so close to the above noted weekly support! Thus, opting to stand on the sidelines here may very well be the best path to take for the time being.
Data points to consider: There are no high-impacting news events on the docket today relating to these two markets.
While the buyers and sellers slug it out around the 116 band, it’s our job to decide on the next probable move! Looking at the H4, a close below 116 would likely place the H4 demand at 114.77-115.18 in the firing range. Still, let’s be mindful to the fact that weekly action is trading from a weekly support at 116.08, as well as daily price lurking within shouting distance of a daily demand base seen at 114.73-115.47.
Our suggestions: Direction, at least for the time being, is a little foggy. With the above (rather risky) short setup in mind, let’s take a look at why longs from 116 are also problematic. A buy from 116 is appealing given its connection to weekly support at 116.08, but there’s a palpable risk of a fakeout through 1.06 being seen down to the top edge of daily demand at 115.47. By the same token, a sell on a close below 1.06 as we highlighted in the above paragraph, not only places one in a challenging position concerning risk/reward in that daily demand sits close by, it is also a huge risk to sell here when we’re sailing so close to the above noted weekly support! Thus, opting to stand on the sidelines here may very well be the best path to take for the time being.
Data points to consider: There are no high-impacting news events on the docket today relating to these two markets.
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