The USDJPY came down to test the 107.57 level in trading today, and held (the low came in at 107.52). Finding support, sent the pair back up but the price correction kept it’s distance from the what I have affectionately called the “Red Box”. This is the area where the most trading has occurred at over the last few weeks of trading. Admittedly, yesterday’s activity was a whippy, with the price moving above and below the area, but for the entire day today, the price has been trading below the “Box” ; ) . Good for the bears.
USDJPY stayed outside the Red Box in trading today.
Looking at the weekly chart below, the low today came down test trend line support at the 107.52. The price of the USDJPY broke above this level on September 17th and has not looked back. If the USDJPY is to push lower, a move below this level will be needed. The next major downside target comes in at 106.63 on a break. The support bounce is still bullish for the pair.
So with the hourly chart showing some bearish tendencies, but the longer chart still bullish, full control needs to be determined in the coming days. Be on the look for a break AND a momentum on a move below the 107.52, or back above the 108.48 area. The path of least resistance seems to be to the upside – that is the trend . However, the pair has had a good run so a further correction might be in order.
One added insight. On the weekly chart, the line cutting across the top, connects the highs from 2002 and 2007. The price moved above this line, in last weeks trading, but has moved back below it this week. So there is a little more bearishness in that chart.
EDGE: With the failure on the weekly chart, I give the edge to the downside.
USDJPY on weekly chart shows support trend line below but failure on top.
If you have a bias, your risk can be defined against the levels. If the risk is too great, be patient and wait for the price to get closer to your extreme.
