Daily demand at 105.70/106.66 fragile - further selling?

12 jul 2020

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since kicking off 2017, USD/JPY has been carving out a descending triangle pattern between 118.66/104.62.

April and May were pretty uneventful, with June also wrapping up indecisively in the shape of a neutral doji candlestick pattern.

Areas outside of the noted triangle can be seen at supply from 126.10/122.66 and demand coming in at 96.41/100.81.

Daily timeframe:

Partially altered from previous analysis -

Despite failing to connect with the 200-day simple moving average at 108.36, upside momentum came to an abrupt halt at the beginning of July and fashioned a bearish outside day.

Having observed a mild downbeat tone over the course of last week, price, as you can see, eventually made its way back to demand at 105.70/106.66 on Friday. This could entice buyers into the market going forward, though it is worth pointing out a dip lower may target support at 105.01.

H4 timeframe:

Friday’s decline threw light on demand at 106.39/106.64, an area joined closely with channel support (107.36), a 161.8% Fib ext. level at 106.67 and a 78.6% Fib level at 106.51.

The aforesaid demand encouraged a round of buying into the second half of Friday’s session, generating a bullish engulfing candle. Nearby, we have supply registered at 107.03/107.28 (prior demand) and another supply at 107.39/107.20.

H1 timeframe:

Demand at 106.71/106.80 had its lower extreme penetrated early US Friday, reaching lows at 106.64. Enough of a move to overthrow most buyers from the aforesaid area, traders may now look to supply at 107.09/107.00 for shorting opportunities. Note this supply is where an important decision was made to break 107 to the downside. Above here, nonetheless, focus will be on supply at 107.36/107.18 and the 100-period simple moving average.

Structures of Interest:

Long term:

Daily demand at 105.70/106.66 recently re-joined the fight. While this may motivate buyers, it is worth noting the previous reaction out of the zone failed to print anything meaningful, therefore there is a chance sellers may gain additional influence this week.

Short term:

H1 supply at 107.09/107.00 is likely appealing today, as is the H1 supply seen above it at 107.36/107.18. This is fuelled on the view daily sellers may soon gather traction and H1 demand at 106.71/106.80 recently had its lower boundary breached.