You can see it in the chart...
Yesterday, I gave the benefit of the doubt to the buyers in the USDJPY above the MAs. The price went no where, and in the Asian session today, the price fell below the 200 and 100 hour MAs (at 110.62 and 110.54 respectively). The buyers turned to sellers below the MA lines (see blue and green lines in the chart below), and the price tumbled in the London session to the lows reached in the current hourly bar at 110.24. I have yellowed the 110.10-23 area on the hourly chart. What is the significance?
Taking a look at the daily chart, that area was a swing level in ups and downs up to May 2017 (see red circles). In June it got a little messy and this month on the daily it also does not look all that hot. What is important, however, is that since November 2016,
- most of the days stayed above that yellow area.
- There were a number of swing levels against the levels (see red circles).
- Finally, on breaks, the momentum faded with the last three breaks (see red shaded areas) spending less time below the level and with the lowest lows of those breaks, being higher.
So, buyers have been buying dips.
As mentioned, the low today came in at 110.24. Dip buyers coming in? Profit taking? On a quiet day, traders who sold the move below the 200 and 100 hour MA, will look for the supprot targets (with stops below). If the dip buyers really love the low and really love the dollar, we will see a move back above the hourly MAs. I suspect that will take some work today. More patient buyers might look to be a buyer on a dip toward the 110.10 level (with a stop below)
That seems to be the best technical story for the day as traders trade the ranges.
