Recent action shows that the USD/JPY extended its downside move from April’s opening level at 111.41 yesterday, taking out the 110 handle and clipping a low of 109.60 on the day. Despite this aggressive selloff, H4 price is seen testing an AB=CD (see black arrows) 127.2% Fib ext. at 109.54, which is shadowed closely by the mid-level support at 109.50.
Although the 109.50 neighborhood is a tempting position to enter long from, it might be worth noting that daily action recently broke through support at 110.58 and now shows room to extend down to demand plotted at 108.55-109.17. Also of note is the weekly chart. The support area at 111.44-110.10 has recently been breached. In the event that a close is seen beyond this zone, this could lead to a move down to the support area logged at 105.19-107.54.
Our suggestions: We confess that we absolutely love 127.2 extensions! But trading against higher-timeframe flow is never nice. In order for us to be permitted to enter long from the 109.50 region, a reasonably sized H4 bullish candle is required. Of course, this is by no means a guarantee that the trade will pan out. What it does do though is indicate buyer intent off of a high-probability level.
Data points to consider: US import prices at 1.30pm GMT +1.
Although the 109.50 neighborhood is a tempting position to enter long from, it might be worth noting that daily action recently broke through support at 110.58 and now shows room to extend down to demand plotted at 108.55-109.17. Also of note is the weekly chart. The support area at 111.44-110.10 has recently been breached. In the event that a close is seen beyond this zone, this could lead to a move down to the support area logged at 105.19-107.54.
Our suggestions: We confess that we absolutely love 127.2 extensions! But trading against higher-timeframe flow is never nice. In order for us to be permitted to enter long from the 109.50 region, a reasonably sized H4 bullish candle is required. Of course, this is by no means a guarantee that the trade will pan out. What it does do though is indicate buyer intent off of a high-probability level.
Data points to consider: US import prices at 1.30pm GMT +1.
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