Our take on the USD/JPY

FX:USDJPY   U.S. Dollar / Japanese Yen
Like the Aussie dollar, the USD/JPY             also had a relatively busy week ranging over 300 pips all in all. The closing difference, however, was a mere twenty pips or so at 121.09, as the pair continued to hold above the weekly swap (support) level at 120.29. Should bids fail here this week, do keep a close watch on the support area seen directly below it at 118.22-119.25.

Down on the daily chart , price came within four pips of stabbing into resistance seen at 123.59 before aggressively diving south on Friday. During this sell-off, support (now resistance) at 122.22 was taken out and price settled for the week at the tip of demand drawn from 120.34-121.01. Fundamentally, we believe this movement was triggered during the BoJ meeting.

Moving down a level to the H4 timeframe, multiple supports were taken out during Friday’s bearish onslaught, ending with candle action beautifully testing a Quasimodo support level at 121.06. Now, considering that price closed the week out just above this barrier, this will be a level we’ll have our eye on around the open today. There are a number of technical aspects that support this view: it’s not only supported by both psychological support 121.00 and a deep 78.6% Fibonacci level at 121.03, but if you remember from our higher timeframe analysis above, it’s also supported by daily demand lurking just below it at 120.34-121.01. However, as technically sound as the H4 Quasimodo may appear, price could fake below our H4 level into the aforementioned daily demand. Therefore, we’d recommend only buying from the H4 level with the aid of lower timeframe confirmation. Should all go to plan and we manage to locate a buy setup around 121.06, we’d look to ultimately trail our position behind lower timeframe supports up to psychological resistance 122.00.

Supposing that the 121.00 region gives way, however, all eyes will be on H4 support coming in at 120.69. Not only is this level located deep within the above said daily demand, it also withstood multiple touches in a short space of time early last week, likely indicating strong support. If one is interested in entering long from here using a pending order, we’d recommend placing your stop below the daily demand zone itself. For us, however, we’d still prefer waiting for confirmation from the lower timeframes here due to the possibility price may fake below this daily demand into a daily support area lurking just below it at 120.02-120.44.

Levels to watch/ live orders:

• Buys: 121.06 Tentative – confirmation required (Stop loss: dependent on where one confirms this level). 120.69 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: Flat (Stop loss: N/A).
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