Works way back into consolidation area
The USDJPY has tested and found support on the first look against the 38.2% of the move up from the Friday low at the 118.426 area. The bounce has also come near the lowest of the consolidation highs at 118.477. The low dipped to 118.426). Trade figures from China were a disappointment, Russia/Ukraine tensions, and heightened concerns about Greece have traders looking back into the JPY as a safe haven (or so they say at least). The European stock indices are all showing negative signs as well as NY traders enter for the day.
On Friday, the pair surged on the back of the stronger US employment report. The pair broke out of the consolidation area defined on the top by the 118.857 high. The high came in at 119.208, short of the 119.309 high from January 12. The correction today, keeps the buyers in control, but just barely. I think traders who are long, would not be happy with a move back below the recent January highs. A break below the 118.426 level would next target 118.184 and the underside of the broken trend line near the 118.00 level.
Friday's story transitions to Monday's story. The employment strength is transitioning and the USDJPY market has been full of ups and downs - not trends that last. So I have a close eye on the support level.
Remember last week, the pair failed on breaks below a support floor against the 117.17-32 area. Is this week 's story going to be about failures on the topside? The support is so far holding. Buyers will now want to see the price start to work it's way back above the recent highs at 118.647 and 118.857 (and stay above) to give more confidence that the Friday move higher was not a one day affair with the upside.