As far as we see it, the USD/JPY pair is caught within a 4hr descending channel (119.65/121.31) at the moment, and to be honest, trading anywhere other than the extremes of this area is considered to be mid-range for us. With that being said, we currently see two possible scenarios in this market:
• The first is a simple AB=CD pattern into a Quasimodo support barrier coming in at 119.21. For this to complete though, bids at both 120.00/119.50 will need to be consumed. We’d recommend only entering at 119.21 if one spots lower timeframe buying confirmation, since price could just as easily fakeout to 119.00 lurking just below it.
• The second level we have our eye on is 120.77. This not only lines up nicely with the 4hr channel resistance, but also floats just above a daily swap (resistance) barrier at 120.59, which has been holding this market lower now for around two weeks! Whether we enter at 120.77 or not will, at least for us, depend on if the lower timeframes show bearish strength at this region.
Levels to watch/ live orders:
• Buys: 119.21 [Tentative – confirmation required] (Stop loss: dependent on where one confirms this level). • Sells: 120.77 [Tentative – confirmation required] (Stop loss: dependent on where one confirms this level).