Another day in the market.
And this is the USD/JPY analysis for today, January 4, Wednesday.
Yesterday we had a break of the 130.50 support and a new low at 129.50. At the end of the day, we closed a little under 131, which counts as a successful defense of 130. The downtrend is still alive, but there was a big reaction at 130 with the price rebounding over 100 pips from the low, so I took this as a signal to increase my position. My target to offload my add is the 200hma, which is a little over 132 at the current time.
So how is the price action today? The bulls attempted to stay above 131, but got rejected a little under 131.50. That area looks to be serious resistance now as it stopped the advance two times yesterday. Experience in markets though shows that on the third test resistance or support get broken. However, in this case we will have to wait, as the price has gone under 131 and actually even under 130 already so far from 131.50.
As I am typing this, the tussle is between 130.00 and 130.50. 130.50 is the short term resistance, then 131.50, and then 132.30. There doesn’t seem to be much appetite for the upside at the moment and there is a lot of resistance following the quick drop in the last week from the highs at 134.50.
In terms of support, we have yesterday’s low at 129.50 and then we have a lot of scary open space down to 126.50.
Apart from the technical levels we have some economic reports today including the release of the FED December meeting minutes. I have no idea how those will affect the price action, but it might get volatile, hopefully to the upside for my dollar long yen short trade.
So this is all I have for today, talk again tomorrow!