Tests support area at 120.73-81
The USDJPY took it's initial clue from the weaker than expected US retail sales and moved to a new low for the trading day. that low tested the 120.73 – 81 area (the low came in at 120.685). This area corresponds with high prices going back to December 23 to January 2 (see the top yellow area in the chart below). The better than expected initial jobless claims may have slowed the decline. Also, weather may have had an impact as building materials and autos led the declines (especially in the eastern portion of the US).
Looking at the 5 minute chart, the correction off of the low, has seen the 38.2% retracement of the days range hold resistance at 121.058. If the sellers are to remain in control, I will be looking for the 121.058 – 121.173 to find sellers with stops above.
With support holding, and intraday resistance also holding, we are seeing the market chop around in a trading range. The market had a pretty good number to take the pair even lower (3 down retail sales in a row). So I guess, I am not all that excited about what happened. However, I would expect that the sellers may still hold the advantage (against the resistance level above), with the caveat that 120.73 needs to be broken.
