ICmarkets
Short

Possible Aussie shorts beyond 102.46...

FX:USDJPY   U.S. Dollar/Japanese Yen
143 0 5
Weekly gain/loss: + 162 pips
Weekly closing price: 102.89

Weekly view: USD/JPY             bulls went on the offensive last week, extending the prior week’s bounce off support drawn from 100.61. Be that as it may, it was not all sunshine and roses for the pair. Towards the end of the week, price struck weekly highs chalked up on the 29/08 around the 104.32ish range, consequently forcing the candles to pullback into the close. Should the bulls continue with last week’s intensity, nonetheless, we may see a break of these highs and a push up to the resistance area at 105.19-107.54.

Daily view: The story on the daily chart shows that price sold off from a resistance zone coming in at 103.50-103.89, following a week’s worth of buying. To our way of seeing things, there’s a good chance that this area will continue to hold this market lower here this week, with it having been a considerably strong support/resistance zone on a number of occasions right back to the year 2008! The next downside target to keep an eyeball on is the support fixed at 102.43, followed by demand coming in at 99.53-100.23.

H4 view: The impact of Friday’s non-farm payrolls data aggressively sent prices lower, taking out both demand at 103.34-103.51 (now acting supply) and the 103 handle, leaving price free to tag a nearby H4 demand at 102.65-102.89 at the close. Should we see price rotate from this area today and close back above 103, this could signal that the buyers are ready to retest the underside of supply at 103.34-103.51. Conversely, a close below this area would almost immediately land the pair within touching distance of the mid-way support 102.50/broken (mid-range) Quasimodo line at 102.46.

Direction for the week: As far as higher-timeframe structure is concerned, price could effectively trade either way this week. A continuation move north may come into view on the weekly timeframe surpassing the above mentioned highs and tagging the resistance area at 105.19-107.54. On the other side of the field, however, a move lower from the current daily resistance area is, as we explained above, certainly not out of the question.

Direction for today: From current prices, there is not really much to look at as far as direction is concerned (see above in bold). However, a close below the aforementioned H4 broken Quasimodo line (mid-range) could portend a selloff down to H4 demand coming in at 101.17-101.42, since the Quasimodo line also represents daily support discussed above at 102.43. However, we’re not expecting much action today given that both the US and Japanese banks are closed.

Our suggestions: Given the above points, the best course of action seems to be to wait for a close beyond the aforementioned H4 broken Quasimodo (mid-range) line. Should this come to fruition and price retests the underside of this neighborhood along with a H4 bearish candle, we would look to short from here, targeting the above noted H4 demand at 101.17-101.42.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: Watch for price to close below the H4 broken Quasimodo (mid-range) line at 102.46 and then look to trade any retest seen thereafter (H4 bearish candle is required before pulling the trigger).
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