ICM Technical Analysis : USD/JPY 6 March 2020

ICM Technical Analysis : USDJPY – 6 March 2020

The US dollar ceded ground against the Japanese yen Thursday, pressured lower on the back of broad-based USD selling and softening US Treasury yields. Wednesday’s optimism faded, as European markets and Wall Street posted significant losses.

USD/JPY, based on the H4 timeframe, recently attempted to establish a bottom north of the 106 handle, after tunnelling through orders at 107. What’s interesting on this scale, from a technical perspective, is a potential AB=CD bullish correction forming at 107 (black arrows). Adding to this, the relative strength index (RSI) remains loitering within oversold waters, suggesting a pop back to 50.00 may soon take hold.

Crossing into higher-timeframe space, daily price swarmed Quasimodo support at 106.96, and support at 106.80, both now resembling possible resistance levels. Aside from possible support emerging from the 105.70ish neighbourhood (black arrow), the next port of call on this timeframe can be seen around Quasimodo support at 105.05.

The story on the weekly timeframe had price action record its largest weekly drop since July 2016 last week. Buying in this market could position price back around the 2019 yearly opening level at 109.68, whereas additional losses could see a Quasimodo formation off 105.35 enter view. Note this weekly Quasimodo support aligns closely with daily Quasimodo support mentioned above at 105.05.

Areas of consideration:

A recovery from 106 is an idea, having seen the approach forming by way of a H4 AB=CD correction and the RSI tackling oversold waters. Even so, traders with plans to fade this neighbourhood may find higher-timeframe opposition unsustainable. For this reason, we could be in for further loss beyond 106, which may prompt intraday bearish scenarios to the weekly Quasimodo support at 105.35.

Disclaimer: The information contained in this material is intended for general advice only.