Support & Resistance

New lows for the USDJPY. What next?

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USDJPY falls to a new low and looks toward swing lows

The USDJPY fell in trading today without Bank of Japan pushing the price lower (that is a new development). Looking at the hourly chart, the price fell below the low price from yesterday and other swing levels from October 13 and October 14 (see blue numbered circles) and the buyers turned to sellers.

The new price low seen in the last hourly bar has moved down to test the swing high from October 12, and swing low from October 13 at 146.426. Move below that level and the 50% midpoint of the move up from the September 22 low AND the swing low from last Friday’s trade forms a strong support target at 146.138. Key level. Be aware.

On Monday – after the Bank of Japan intervention – that level was broken on a move down to 145.482. That low was between a swing area between 145.22 and 145.82. Another key level to get to and through if the sellers are to take more control.

Of significance and the price action is that for the 1st time, the USDJPY is seeing some non-intervention related selling in the USDJPY pair which is a shift from the recent trends.

Recall from the October 5 low, the price closed higher for 12 consecutive days. On Friday last week, one can argue the last surge was a exhaustion run up to the 151.938 level, before the sharp 500+ pip move to the downside, and the shift from bias to sellers..

Supporting the selling idea is the corrective high off of the Bank of Japan intervention on Monday, saw sellers leaning against the 100 hour moving average (blue line in the chart above). On Monday – and again yesterday – the price tried to trade below the 200 hour moving average only to find buyers. However in the New York session yesterday, sellers were able to break below the 200 hour moving average and push the price down toward the 38.2% retracement at 147.507. Sellers were making a play.

With the break below the 38.2% retracement today, sellers are continuing their play. The question now becomes can the price get below the 50% midpoint? Getting below that level opens the door for further selling potential.

What would hurt the selling bias?

Moving back above the 38.2% retracement 147.507 (up to 147.666) would disappoint the selling momentum, especially if the 50% retracement cannot be broken.

For now sellers are making their play and they are doing it without the Bank of Japan but overall USD weakness instead.