The USDJPY has defined the "Red Box". Tests the hourly MAs

The USDJPY based near the 100/200 hour MAs yesterday and that led to a run higher that saw the pair move to test the high from November 29 at 113.954. The high price reached 113.95 - just below that target.

Recall from last week, the lows came in at 112.524 and 112.555 (within 3 pips of each other).

With the price moving down today, we now have a defined "red box", defining the range for the pair over the last 9 or so trading days. In between the high and low extreme sits the 100/200 hour MAs at 113.436 and 113.335 respectively (blue and green lines).

The price just traded below the 200 hour MA, tilting the bias more to the downside, but the price is not really running. Traders will nevertheless be eying the higher 100 hour MA for intraday clues. If the price can stay below, the sellers hold the strongest hand. If the price starts to trade more comfortably above (and the price moves back above 113.578 (it seems to be a swing level over the last 15 or so hours).

So decision time for the USDJPY in what is an up and down trading range. Such markets can get comfortable trading the outside ranges, but it tends to go from level to level between the extremes. The 100 and 200 hour MAs are the "in play" levels now with sellers making a play.

PS there are a number of lumpy USDJPY option expirees at 10 AM cut off today:

  • 1.1B at 112.90 to 113.00
  • 1.0B at 113.10-15
  • 1.0B at 113.25B
  • 868M at 113.50
  • 1B at 113.70

With the price at 113.35, the price is bracketed by 113.25 and 113.50. Option sellers want to see the price settle at the strike price. Option buyers want to see moves away from the strike price. It can influence price action depending on if some owners/or sellers want to push the price in their favor. The problem is we don't really know the makeup of the buyers and sellers (nor their intentions). We just know, it can cause volatility.

PSS. US yields are lower with a tilt to a flatter yield curve.

  • 2 year 0.675%, -0.3 basis point
  • 10 year 1.484%, -2.5 basis points
  • 30 year 1.55%, -2.0 basis points

US stocks are down still, with a slight weakening from earlier New York levels

  • NASDAQ index -60 points
  • S&P index -15.3 points
  • Dow Jones -118 points