Forex technical analysis: USDJPY starts to work on last weeks weekend gap

Technical Analysis

Author: Greg Michalowski | usdjpy

Trades at session highs after Mnuchin

The USDJPY has moved higher through the comments from Mnuchin.  He continued to talk positively about tax reform, but he did imply the 15% is likely not doable.  The market was looking that way anyway.  It is still an ambitious undertaking.

Technically, the market price is moving back into the gap from Friday Sept 1 close to the September 4th trading day. That gap runs up to 110.21. The high today reached 109.99 so far. According to Mike there are about 400 M option expires at 109.80 and another 400 or so at 110.00. The 200 bar MA on the 4-hour chart comes in at 109.749. That is now close risk for the longs now. 

Earlier in the day, at the low for the day, the USDJPY held support  against the 100 hour MA on the 4-hour chart at 109.29.  Bullish. Yesterday, the price had a huge run to the upside. 
  • The price gapped higher
  • It moved above a broken trend line
  • It broke above the 100 hour MA and 
  • The 200 hour MA and 100 bar MA on the 4-hour chart.
It was a big trend move higher.

Although slower, the pair continues that trend move. Let the technicals tell you when the trend is over. The first clue would be a move back below the 109.749 (200 bar MA on 4-hour).  A move below that level should see some more selling. Until then though, the buyers are more in control

On the topside , get above the 110.00 natural resistance level is the next target. Above that and the gap up to 110.21 will be eyed. The swing highs from August 31 at 110.66 and then the August high at 110.944 will also be targeted (over time).  Buyers still in control.