Daily Timeframe: The shows that a small daily demand area at 117.225-117.873 (located within the aforementioned weekly supply swap area) is currently holding the market higher. In the event that this area of demand is consumed, we see very little stopping the prices from declining all the way down to 115.503, a major daily swap level.
4hr Timeframe: For anyone who follows our analysis on a regular basis, you may recall us mentioning that we were looking for buys around the 4hr decision-point demand area seen at 120.071-120.366. At that point in time, we were at our desks but saw no entry north, which was quite fortunate really considering the move only lasted 20/30 pips at best.
A vicious-looking spike has recently been seen from the round number 118 (located just above the aforementioned daily demand area) that forced the market to close above 119.
In our opinion, The USD/JPY pair shows very little direction on both the weekly and daily timeframes (see above), and as such, any trades taken by us will require lower-timeframe confirmation. Price is presently trading between 120, and 119, and is somewhere we would not be comfortable trading due to the high this pair has seen over the past few weeks. A break above would likely force the market to test a 4hr supply area coming in at 120.992-120.668, we’d be watching the lower-timeframe action here for an entry south around the 120.629 mark. Likewise, a break below could attract further selling down towards 118, where again we’d be watching the lower-timeframes for confirmed buying around 118.057.
Current buy/sell levels:
• Buy orders: 118.057 (Predicative stop-loss orders seen at: 117.781).
• Sell orders: 120.629 (Predicative stop-loss orders seen at: 121.073).
I took a short at 119.550 where price action gave me a confirmation for a greater target.