Daily view: The rebound seen from the daily 118.62 extended higher during Friday’s session, consequently forcing the USD/JPY pair to close at 120.16 just below a daily Quasimodo coming in at 120.35. The move from here should not really come as much of a surprise. This daily boasted not only additional confluence from a daily extended from the low 115.55, but also the fact that it is located deep within the aforementioned weekly demand area gave this move extra recognition.
4hr view: The USD/JPY’s recent advance cleanly took out the 4hr supply area at 120.07-119.89, and also closed above a very important candle close -120.22. This close is extremely important to us since it likely suggests we’re going to see higher prices today and possibly into the week. At this point, you may be asking yourself why is 120.22 important? Well, take a look above 120.22, notice that strong selling wick seen marked with a black arrow at 120.42; this is very likely a supply consumption wick which means that above 120.22, prices would potentially be free of supply/resistance for a rally rally towards 120.73 – the 4hr Quasimodo .
So, with all of the above in mind, it all comes down to the recently broken 4hr supply area at 120.07-119.89 to hold as demand. In the event the buyers manage to defend this area, this would be a fantastic zone to look to buy from and target 120.73. However, what about the daily Quasimodo at 120.35? You would be right in thinking that by entering long at the 4hr swap area we would be buying into daily resistance! Nonetheless, our target is only 40 or so pips above this level which is a relatively small move on the daily scale. Moreover, let’s not forget that price is still trading from weekly demand at 118.22-119.40. Therefore, from where we’re standing, a buy trade at the 4hr swap area with supporting lower timeframe confirmation is worth the risk.
Our current buy/sell orders:
• Buy orders: 120.07-119.89 (Predicative stop-loss orders seen at: 119.86).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).