The USDJPY has been the beneficiary of the “flight into the safety” flows. This, along with lower oil prices which is also a stimulus as Japan is reliant on importing of oil, is positive. Having said, that the markets are fluid, illiquid. They are focused and influenced by stocks, the Russian Ruble, oil and other forces. That cocktail, can lead to volatile moves. Just looking at the range for the day at 246 pips (the 22 day average is 131 pips) tells you that the action is at a high level. So be careful.
The 115.44-55 is support now for the USDJPY> The low reached 115.55.
As a result, finding technical levels are important.
Looking at the daily chart above, one level of importance comes in at the 38.2% of up from the October low the the December high. That level comes in at 115.475. The low for today has come in at 115.55. Also near that level is the low from November 17 at 115.447, and highs from November 6 to November 7 at 115.50 ad 115.55 (see chart above). IF the selling is to continue, a move below this level and staying below will be eyed.
Closer resistance today will come in against the 100 bar moving average (blue line in the chart below) on the 5 minute chart. That level comes in currently at 116.65. That moving average is in between the 38.2% retracement of the move down from today’s high to today’s low at the 116.476 level and the 50% retracement at the 116.757 level. This area (yellow area in the chart below) is where traders will look for sellers to enter. If the price to remain below this area, the sellers remaining control. Another test of the support area can then be expected if the level can hold. A move above and traders will likely be dealing with other forces.
The problem for many traders who are trading the USDJPY is the range is pretty lofty at 246 pips today. So that can make corrections somewhat brutal. A 38.2% retracement of the range today is 91 pips. So if you must trade, use smaller amounts, try to be patient and if you don’t get your price, don’t trade.
The USDJPY price should stay below the 38.2-50% of the move down from today’s high.
