Yesterday, the USDJPY broke below the 200 day MA and closed below the level. Today, the follow through day could not extend the downside and the price is now back above the 200 day MA level at the 79.03 level. A move below the 79.00 should get shorts back on board but until then, there has to be some disappointment for the sellers.
Looking at the hourly chart, the 79.03 area is also a key level today. That level currently corresponds with a broken channel trend line (see hourly chart below). If the price breaks back below this level, I would expect momentum selling with a move toward the 78.78 level (61.8% of the move up from the June 1). Below that the low from June 15 comes in at 78.60.
If the 79.03 level cannot be broken, the next key level to target on the topside is the 100 hour MA at 79.21. The 200 hour MA comes in at 79.41 and will also be a key target. The last time the price was above the 200 hour MA came on the back of rumored Bank of Japan verbal intervention (on July 12th). That move was quickly reversed and the trend down resumed.
Needless to say, Bernanke’s testimony will help dictate the dollars fortune today. However, being aware of the key levels should provide a roadmap for a sustained trend like move should the fireworks ignite.
