The pair non-trended last week
The USDJPY traded in a 59 pip trading range last week. That was the 2nd lowest trading range for the calendar year (see post from the weekend by clicking here). The pair was stuck in the mud. The price needs to get out of the non trend mud from last week's trading.
On Friday, the price closed at 106.14 which was between the near converged 100 and 200 hour MAs (blue and green lines). The "market" was saying on Friday "Let the games begin on Monday. Go with the break above or below the MAs".
Looking at the hourly chart, the decision was to the downside. Sellers leaned against the higher 200 hour MA (green line) and later tested the 100 hour MA and found leaning sellers again. The price has chopped lower but is currently trading at a new day low at 105.831. The pair is running away from the 100/200 hour MAs.
The next target comes in at the low from last week at 105.782. Moving below that level opens the door for further downside potential.
Close risk now will be eyed at 105.976 to 106.00. More conservative risk would be up near the 100 hour moving average at 106.093 (or even the 200 hour moving average at 106.162).
It seems from the chart, that the USDJPY has made a big-gish move, but the range is still only 34 pips (vs. a 22 day average of 62 pips). As a result there is still more to prove (and room to roam) although the sellers are certainly taking more control in trading today.
A break below 105.782 would have traders looking toward the September 1 low price floor at 105.585.
The USDJPY traders are trying to get out of the mud. The sellers are taking the upper hand in early trading this week.