Short term
Trade view / 27 September 2016 at 23:34 GMT

USDJPY: Potential for break of chart support

Managing Director / Technical Research Limited
New Zealand
Background

The Clinton-Trump sideshow is now out of the way and USDJPY traders can get back to considering things that really matter – like what the Bank of Japan is up to. Governor Haruhiko Kuroda spoke on Monday and offered some interesting insights into the bank’s “new framework” for monetary policy.
 
He speaks again on Thursday but is unlikely to add anything new. But the market is already testing his resolve: the yield on the 10-year JGB is below target at –0.07%.
 
Meanwhile, the probability of a US Federal Reserve rate hike in December has fallen back under 50%, taking away support for the USD. Chair Janet Yellen appears before Congress over the next two days but the topic is banking regulation so we shouldn’t expect much in the way of comment on monetary policy.
 
Friday looks like a more promising date for some action in USDJPY as we will get inflation updates in both Japan and the US, the latter being the price index for Personal Consumption Expenditures (PCE), the Fed’s inflation benchmark.


Management and risk description

For the past few months the dollar has been trading in a contracting Symmetrical Triangle pattern, which appears close to completion (see daily chart below).

“Zeroing-in” on the hourly chart (refer below) there are two pattern structures of note. The first is a Head and Shoulders continuation pattern and the second is a developing Descending Triangle (refer Hourly chart).

Key support now lies at 100.10/99.10 and a break of this support is probably enough to trigger a strong sell-off toward this year’s 99.10 June low, then the mid-98.00s (see daily and weekly charts below).

A successful downside break from USDJPY’s 3-month Symmetrical Triangle would project a downside move as low as 92.00 over the coming weeks.


Parameters

Entry: A break below 99.90 support today is seen as a selling opportunity.

Stop: 100.42, initially.

Target: 50% at 99.18 and 50% at 94.96.

Time horizon: Allow enough time for the downside to express itself on a break.

USDJPY hourly chart (click to expand)
USDJPY Hourly Chart
 
Source: ThomsonReuters  

USDJPY daily chart (click to expand)
USDJPY daily chart
 
Source: ThomsonReuters  

USDJPY weekly chart (click to expand)
 
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more


— Edited by Susan McDonald


Non-independent investment research disclaimer applies. Read more
28 September
lee88 lee88
Hi Max... u think now good levels to long silver... stop at 18.80.. ?
29 September
vyacheslav111 vyacheslav111
Hi, Max! Your opinion on USDJPY now ?

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail