ICmarkets
Short

Our take on the USD/JPY this morning...

FX:USDJPY   U.S. Dollar/Japanese Yen
143 0 3

Weekly gain/loss: - 283 pips
Weekly closing price: 104.08
Weekly opening price: 104.70

Weekly view: Last week’s sharp run to the downside pushed the USD into further losses against the safe-haven Yen, stripping close to 300 pips off its value. This, as can be seen from the weekly chart, saw this unit take out weekly demand at 105.19-107.54 (now acting supply) and come within touching distance of connecting with weekly support at 103.22. To our way of seeing things, both of the above said areas hold equal weight.

Daily view: Despite the currency finding support from daily demand at 103.50-103.89 on Thursday, daily supply at 104.68-105.36 (located just within the aforementioned weekly supply zone) held price lower on Friday, which is, thanks to this morning’s gap north, where price is trading from currently.

H4 view: After a rather quiet day on Friday, the pair started the week on a relatively volatile note, gapping over sixty-pips north! With this in mind, here are the battle lines we currently have noted down for today and possibly going into the week. However, before these lines are hit, there is a strong possibility that price will sell-off to fill the weekend gap, so do be prepared for this!

• The first line of interest can be seen at the 105 handle. Not only is this line housed within the current daily supply zone at 104.68-105.36, it also sits only nineteen pips below the weekly supply area seen at 105.19-107.54.
• The second barrier we have our eye on comes in at 105.71 – a H4 resistance level. This line is housed within both of the above said higher timeframe zones, and has proved itself as a worthy support in the past!

Our suggestions: Seeing as how the above hurdles are fixed levels, we would strongly advise only trading these lines with a supporting lower timeframe sell signal. This could be in the form of an engulf of demand, a trendline break/retest or simply a collection of well-defined selling wicks around the resistance level.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 105 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area). 105.71 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
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