Daily Timeframe: Looking at the daily picture, we can see that price remains consolidating just below a daily supply area visible at 122.61-121.54 (encapsulates the aforementioned weekly Quasimodo ). Assuming that further selling is seen from here, price will very likely visit the daily swap level positioned below at 120.45.
4hr Timeframe: For those who read our previous report on the USD/JPY , you may recall us mentioning to watch for confirmed sells around the 4hr supply area at 122.01-121.67 down to 121.00. Well done to anyone who got in on this move!
So that we’re all on the same page here, let’s just quickly recap. The weekly chart shows price lingering JUST BELOW a weekly Quasimodo , while the has hit supply already (see above). Therefore, where does this leave us on the 4hr timeframe? Taking a closer look, we believe that the 4hr supply at 122.01-121.67 could very well be a fake. What we mean by this is price reacted nicely at this area already, thus giving traders the confidence to short here once again. However, lurking just above this level, as you can see in green, is the aforementioned weekly Quasimodo just begging to see some action . Therefore, this 4hr supply may have been planted here by pro money to attract millions of traders to place shorts here again, and set their buy stops where? Right above the zone, which will be a beautiful pocket of liquidity for well- funded traders to sell into from the weekly level. With this in mind, we have decided to set a pending sell order at 122.16 to try and catch this potential fakeout.
Conversely, if price does not do the above, and continues to trade south, a close below 121.00 is what we’ll be looking for since this will open the trapdoor down towards the daily swap level at 120.45. The reason we believe price would drop this far is simply because demand has already likely been consumed – take note of the two obvious demand consumption tails seen marked with blue arrows at 120.83/120.62.
Current buy/sell orders:
• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 122.16 (Predicative stop-loss orders seen at: 122.55).