Well done to any readers who shorted USD/JPY!

USD/JPY:

Trade concerns regarding the US and China resurfaced Thursday after China voiced doubt about the possibility of a long term-trade pact with US President Trump. This weighed on market sentiment, consequently ramping up demand for the safe-haven Japanese yen.

Down 80 points, or 0.74%, USD/JPY action wrapped up the day closing just north of 108 in the shape of a near-full-bodied daily bearish candle. Additional layers of H4 support can be seen here at 108.07, October’s opening level, and trend line support extended from the low 104.44. Despite this, early movement this morning nudged beneath 108 and is challenging the said trend line support, with a break suggesting a move to 107.

With reference to higher-timeframe structure, daily price sold off following Wednesday’s shooting star candlestick pattern (considered a bearish signal) out of daily resistance between 109.17/108.99 (comprised of a resistance level at 109.17, the 200-day SMA and Quasimodo resistance at 108.99). The next downside target on this scale falls in close by at the 50-day SMA (blue – 107.67), followed by support at 106.80.

Areas of consideration:

Traders who read Thursday’s technical briefing may recall the following piece:

Although most traders short the 109 handle were likely taken out on the back of yesterday’s move, the opportunity to re-enter the market short is certainly there.

Entry at current price is an option today, with protective stop-loss orders plotted above yesterday’s high at 109.28. The fact we have robust daily resistance in motion alongside a daily shooting star candlestick pattern (considered a bearish signal) is likely enough to draw in sellers to at least H4 support at 108.41, with a move to 108 also a possibility.

Well done to any readers who managed to take advantage of this move.

Going forward, a break of the current H4 trend line support is eyed, which if followed up with a retest (entry/risk can be set according to the rejection candle’s structure), a bearish play towards the 50-day SMA as the initial target, could be an option.