USDJPY:- 106.000 Holds The Key
USDJPY:- In a current market providing choppy and indecisive behaviour we find our major JPY pairs in zones of consolidation and therefore have to dive deep into the technicals to try to understand what is occurring. The 106.000 Monthly level will hold the key to either a rebound in price or a further collapse.
Scenario A is a retest of the level before carrying on Wednesdays Huge 1.47% daily closure growth and push higher to fulfil the upside target region of 108.500. We have seen the pair break from a triangular pattern to potentially only remain within a channel that I recently spotted.
Scenario B is my favoured bias until price action presents an alternative situation.
The series of Lower highs can be spotted in alignments with the descending trendline and higher time frame analysis. If a daily break of 106.000 can occur I do believe that 104.000 could still be on the cards. The Weekly candle is currently showing signs of rejecting the MA after spiking and falling in the prior weeks, the blue Ma is acting as a dynamic area of resistance for the pair guiding price to the downside and therefore a strong bearish closure could be the signal and confirmation of a new Lower swing higher and a new Lower low could be expected to form around 104.000 What would invalidate this trading set up is a break to the upper side of the channel resistance.
Previous:- The pair has continued its decline from the resistance highs of 114:000. We are now trading 800 pips lower since the turn of the year currently sitting on the support level of 106.000. As you can see we are currently within the triangular formation, this could be a set up applied to the next leg of the journey. A break to the downside would see the next level of support at 104.000 be tested. This was a region of price that saw violent behaviour back in November 2017 and therefore volatility may increase once more in this region. For the time being the JPY is trading bullish against the majority of its major counterparts and is expected to have continued momentum from the bearish February closures that occurred.
On Wednesday the 21st of March we have the Federal Reserve Intrest rate decision, which is currently forecast to increase from 1.5% to 1.75%. If this was to occur we may see the USD regain some strength and recover slightly. During times of Major fundamental announcements, we often find that price gravitates towards Major psychological prices points before rebounding, using the Macroeconomics as a catalyst to move price in a certain biased direction.
As we wait for Wednesday's news announcements we can let the Technicals pave the way and a break of the triangular formation would indicate that a retest of 104.000 could be on the cards.