The USDJPY has recovered from the move lower after the weaker Durable goods and Case Schiller Home Price data. However, the better than expected Richmond Fed Manufacturing and Consumer Confidence stopped the selling and the pair has stabilized at higher levels.
USDJPY fell below the 100 hour MA and trend line on the back of weaker data but recovered.
On the move lower, the price of the USDJPY fell below the 100 hour MA (blue line) and trend line support at the 107.77 and 107.73 levels respectively (levels are currently at 107.82 and 107.80). This was the first dip below the 100 hour MA since October 21st. The market was able to recover, however, as traders who sold received no satisfaction, and the 10 AM ET economic releases were better than expectations.
Going forward, the 100 hour MA (blue line at 107.82 currently) and trend line are reestablished as support levels for the pair. Stay above and the bulls remain in control. The double tops at the 108.342 and the week’s high at 108.37 becomes the next upside targets. The high for the week was made on the opening (i.e. the 1st 5 minute bar. That can’t remain, can it?).
A move above the 108.34 level, and the 108.733 high from October 8th becomes the next target. The high on that day was testing the 100 hour MA on a corrective move, but failed to breach the level (see chart below).
Targets on a move higher.
Should the price move below the trend line and the 100 hour MA, the steady rally from the October 15 lows (at the height of the Ebola and stock market scare) should start to see a more meaningful correction. The 38.2% of the move up from the October 21 low comes in at 107.54. The 50% of the same move higher comes in at 107.293. The 200 hour MA (green line) is not that far away at the 107.25 and moving higher. A move below the 200 hour MA would indicate that the bears are taking more control, and should solicit more selling.
Although the levels outlined are all in play going forward, the momentum has slowed considerably and London/Europe is looking to head home. So activity should slow further. However, there is still a lot of time until the FOMC decision at 2 PM tomorrow, so there is room to roam between now and then. Buyers in control now but look for profit takers against 108.34 with stops on a move above.
