H4 demand at 105.64/105.89 is in focus this morning

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.

March currently trades lower by 1.66%.

Daily timeframe:

Partially altered outlook from previous analysis –

Tuesday’s 120-point downside move drew the market 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, moved into focus yesterday following Thursday’s 130-point decline. 106.60/107.09 now represents a potential supply zone.

The RSI indicator entered oversold waters.

H4 timeframe:

Demand at 106.94/107.30 (now a serving supply) gave way in recent trade, with crosshairs now fixed on demand at 105.64/105.89. Note the current demand holds within it a 161.8% Fib ext. at 105.83.

H1 timeframe:

Broad USD weakness Thursday, weighed by waning US Treasuries scoring all-time lows, as well as global equities plummeting, directed USD/JPY through 106.50 to 106 in recent trade. 106.50, as can be seen from the chart, offered resistance shortly after giving way as support.

Structures of Interest:

Supporting 106 on the H1 has daily demand at 105.57/106.17, with both daily and H1 timeframes presenting oversold conditions from respective RSIs. A touch south of 106, we also have H4 demand lurking around 105.64/105.89.

Before buyers step in from daily demand, we could whipsaw through 106, tripping sell-stop liquidity, and bring in H4 buyers from demand at 105.64/105.89.

106.50 represents initial resistance, followed by the underside of daily demand-turned supply at 106.60.