Price recovers to 61.8 retracement of the low today

But it's hard to argue a case that we'll see a full-blown recovery ahead of US trading, unless the BOJ has something to say that is. One of the best times to use a Fib retracement is usually after such a swift move in price action. But the way we all draw them can be up for interpretation.

In cases like this, I like to draw them at the peak of the price drop to the low during that same period rather than the usual "swing high to swing low" method. In this case, price has recovered above the 61.8 retracement level of the drop earlier but failed to hold above the 76.4 retracement level.

Even if you draw your Fib a different way, it should roughly be somewhat similar. Either way, this is a bit of a danger zone for the time being. There are worries that the BOJ may intervene to prop up yen pairs (I'm rather amused that they haven't, even if it is a Japanese holiday). While at the same time, markets appear to be waiting for more liquidity to kick in and pressure yen pairs back to the downside again.

Technical levels are your best friend in times like this to help define and limit your risk. But do take note that risk conditions in this kind of environment is even more heightened than your average day-to-day trade. Huge price jumps may leave slippages in your trades so remember to account for such a thing when defining and limiting your risk.

So, if you're uncomfortable taking risks of that magnitude, best to just sit back and wait for other opportunities. There's always going to be another trade in markets.

As for AUD/JPY and most yen pairs for that matter, things are starting to calm down but it sure feels like it's more of the calm before yet another storm comes about to rock the boat. And that could either come from BOJ intervention or another wave of selling that hits when more liquidity enters the market.

The low today managed to breach the 2010 lows but so far price has recovered to move above those support levels. In the sessions ahead, the levels pointed out in the chart above will be the key support levels to watch out for in terms of a downside move (between the region of 71.90 and 72.69).