Have our eye on 112/111.77 for potential shorts...

29 Nov 2017

Despite a heavily bid US equity market on Tuesday and a hawkish Powell testimony, the USD/JPY had a relatively subdued session, up 0.42% on the day. As is evident from the H4 timeframe, H4 price is nearing Monday’s highs at 111.69, shadowed closely by H4 resistance at 111.70 and the daily resistance level at 111.91/112 handle. This – coupled with weekly price chalking up three back-to-back weekly bearish candles from weekly supply at 115.50-113.85 – is an incredibly bearish market, in our view. On top of this, weekly price also shows room to trade as far south as the weekly support area at 105.19-107.54, which aligns with a weekly trendline support taken from the low 98.78.

Suggestions: Given the current landscape, the green area on the H4 timeframe at 112/111.77 is a zone we expect the sellers to respond from. We would not recommend placing pending orders here since the psychological band 112 could attract a fakeout. Instead, consider exercising some patience. Wait for a H4 full or near-full-bodied bear candle to form within/around the area. This will help avoid an unnecessary loss.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 112/111.77 (waiting for a reasonably sized H4 bearish candle to form – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).