The Japan GDP revision was bad soon after the new day’s opening, but it did not weaken the JPY any further, and the USDJPY seemed destined to correct lower in trading today.
USDJPY has correction on its mind.
Looking at the hourly chart, the price at the highs, could not keep any momentum above what I had outlined as topside channel trend line resistance (see chart above). That gave sellers something to lean against.
Since then, the price has been able to break below a few trend line support trend line levels (it is back above one of them currently at 120.88).
What are the targets on the downside should the sellers remain in control?
The 38.2% of the move up from last week’s lows comes in at the 120.318 level. The 100 hour MA (blue line in the chart above) comes in at 120.10. These are targets on a continued corrective move down in the near term.
At the low last week at 117.867, the price dipped below the 100 hour MA (blue line) for 2 bars (1 close). That is it.
So it has been a trend move higher since then. This moving average (blue line in the chart above) will be a key test for the buyers and the sellers this week if tested. Overall, the pair has had temporary dips below the 100 hour MA since the rally started in mid-October (from 105.19 area). The longest dip below occurred over October 25, 26 and 27th (see red area in the chart above). That “break” was good for 78 pips (from the break to the low) before reversing. That is not exactly what the sellers were looking for at the time. It shows, the reluctance to go lower.
Traders have been waiting for a correction in the USDJPY with markets “overbought” from a relative strength standpoint. However, trend moves tend to make “overbought sellers” pay for trading against the trend. As a result, I will use tools that show a bullish above/bearish below bias.
What would keep the bears in charge today?
Looking at the 5 minute chart below, the 100 bar MA (blue line and 38.2% of the days trading range comes in at the 1.2110-12 area. Just above that is topside trend line at the 121.165. Stay below this area today (bullish above/bearish below) and the sellers remain in control in the corrective move lower today. Move above, and it is not the end of the world, but sellers may get more nervous. After all, the sellers are trading against the trend.
The sellers in the USDJPY are keeping control for the day.
