USD/JPY shows interesting price action...

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern. The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. In recent movement, price elbowed a touch outside the upper boundary of the aforementioned descending triangle to 112.22, and retreated lower, forming a shooting star pattern into February’s end.

Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.

Daily timeframe:

The 200-day SMA, currently circulating around 108.37, capped upside yesterday, leaving channel support-turned resistance (104.44) unchallenged. Tuesday’s 120-point downside move drew the candle into the jaws of demand coming in at 106.60/107.09, which witnessed a minor breach in October 2019.

Demand at 105.57/106.17, albeit not the prettiest of areas given the lack of momentum drawn from the base, is next in line should we push lower today.

The RSI indicator also recently voyaged through the 50.0 value into oversold levels.

H4 timeframe:

Demand at 108.41/108.70 continued to offer the market an area of supply yesterday, holding price lower on two occasions. This comes after the pair likely run stops south of the 107.65 January 7th low on Friday.

Demand at 106.94/107.30, in recent hours, came under pressure, having its lower boundary engulfed. This may trigger further downside today, with the next layer of demand not stepping into the fold until 105.64/105.89.

H1 timeframe:

The Federal Reserve, the Fed, lowered rates by half a percentage point Tuesday, in attempt to give the US economy a jolt in the face of concerns about the coronavirus outbreak.

Price action, however, trades beneath the 107.50 point, mingling with the 107 handle in the shape of a hammer candlestick signal (considered bullish), which happens to be reinforced by demand fixed from 106.77/106.94 and the RSI producing bullish divergence.

Structures of Interest:

Daily demand at 106.60/107.09 entered the mix yesterday, which could contain downside today. H4 demand at 106.94/107.30 suggests buyers are weak in this market, holding on by a thread. Therefore, daily demand at 105.57/106.17 may make an entry.

Intraday, we have H1 price fading 107, formed by way of a hammer candlestick bullish pattern, RSI confirmation and H1 demand at 106.77/106.94. As such, 107.50 could shift into focus today, with a break exposing 108. Note the 200-day SMA also resides around 108.37.

Price will likely struggle beyond 108, having noted monthly price recently forming a shooting star candlestick pattern off monthly structure.