ICmarkets
Short

USD/JPY overbought - looking for shorts beyond 105

FX:USDJPY   U.S. Dollar/Japanese Yen
147 0 5
Kicking this morning’s report off with a look at the weekly chart shows that price recently connected with the underside of a resistance area coming in at 105.19-107.54. Bearing in mind that this barrier stretches as far back as 2014, we feel the buyers will have their work cut out for them if they intend on pushing things higher from here. In conjunction with the weekly chart, the daily candles also recently shook hands with a supply zone carved from 105.60-105.25, which happens to sit within the lower limits of the above said weekly resistance zone.

With the dollar surging higher across the board yesterday, this saw the H4 break through the 105 handle and clock a high of 105.34 by the day’s end. As we mentioned in yesterday’s report, we were looking to short between the 105.25/1.05 region, on the condition that a H4 bearish close was seen. As you can see, the bears showed little interest here so we passed.

Our suggestions: We’re sure most will agree, at least from a technical (structural) standpoint that this pair is overbought right now. Back-to-back higher-timeframe supplies coupled with a close below the 105 handle would, in our book, be enough to confirm lower prices are on the cards. However, in regards to entry, our team will be looking for price to retest the underside of 105, along with a H4 bearish close. Only then will our team be clear for entry. This may not come into view today considering we only have the US advance GDP report at 12.30pm GMT on the docket, but will be something to look forward to next week.
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