The 100 hour MA above. The old “ceiling”/swing area is below. 200 hour MA is between the two.
The story is becoming very familiar for the USDJPY. The pair has been consolidating after running higher from the January 8th low. That allowed the 100 and 200 hour MA to catch up with the price. Yesterday, the price fell below the 100 hour MA (blue line) and then the 200 hour MA. There was a peek above the 100 hour MA, but it failed.
Today, the price moved back above the 200 hour MA and again tested the 100 hour MA and failed. The price then moved back below the 200 hour MA (at 109.97). If the price can now stay below the 200 and 100 hour MA, it tilts the bias modestly to the downside.
“Modestly” because there is more work to do.
The next “job” technically is to get below the old ceiling/swing area at 109.675-723. If the price can get below that area, the selling bias tilts more to the downside and gives the sellers more confidence. If the price can stay below that area, there is more room to move lower with a move toward the 38.2% at 109.275 as the next target.
What would help the downside?
- Impeachment stuff. The Dems are not going to win, but if public opinion starts to tilt (or even a few Republican Senators (not likely) , that could raise concern for the November elections.
- Stocks fall (do earnings disappoint)
- Coronavirus fear increases. The confirmed deaths have increased to 17.
- Yields move lower, or simply
- A technical break with buyers turning to sellers
There is little on the economic calendar in the US. The ECB meeting is tomorrow with no change expected. US employment claims will be released tomorrow and Flash PMI data on Friday in Europe and US.
The price action will help tell the story. Right now, the USDJPY is tilting a little as the price consolidates, but the bears are not exactly in open waters. There is work to do and the bias can easily reverse on a move back above the 200 and 100 hour MAs.