USD/JPY: Technical outlook and review...

FX:USDJPY   U.S. Dollar / Japanese Yen
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Weekly Timeframe: The weekly timeframe shows price remains hovering above a major weekly swap level (115.50) at the moment, as long as price continues to trade above here, our bias will remain bullish .

Daily Timeframe: Little price movement on the daily timeframe has resulted in the market forming what looks to be a bullish continuation flag. Overall though, the pair remains trapped between a small daily supply area seen just above at 119.95-119.14, and a daily demand area seen below at 115.55-116.38. It will be interesting to see what the 4hr timeframe has to say about this…

4hr Timeframe: The recent movements on the 4hr timeframe show that price continues to range between a 4hr supply area at 118.84-118.52, and a 4hr demand area coming in at 116.91-117.22. However, since the beginning of the week, price has been confined to a smaller, more compact 4hr range (within the larger range). Limit high/lows can be seen at 116.86/117.68.

Today’s NFP volatility will likely see one of three things happen today:

1. A break above and retest of the small 4hr range (117.68) would likely attract buying interest up to the upper limits of the larger 4hr range (118.84-118.52). This is something we’re personally interested in participating in.
2. A break below and retest of the small 4hr range (116.86) would likely motivate the sellers to push this market south down towards a 4hr demand area coming in at 115.55-116.06. Again, something we’d be interested in taking part in.
3. And finally three. Price can whipsaw the market breaking one side of the range, only to reverse and break the other side; this tends to fool trigger-happy traders, and is extremely common during high-impacting events. As such, we tend to let price do its thing for 10/15 minutes before analyzing for opportunity.

With the above in mind, buying the retest around 117.68 with confirmation is very high probability since we are trading above a higher-timeframe weekly swap level at present (see above). Selling (refer to point 2) on the other hand is something we would need to be careful of since shorting here could potentially put you in the position of selling into higher-timeframe support (see weekly and daily above), so this trade would require constant monitoring, along with very strict trade management rules.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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