Reverses earlier declines as markets shrug off the Iran attack.
The USDJPY has snapped back as the markets shrug off the Iran attack as a tit-for-tat with no loss of life. No harm. No foul. Tensions can still escalate but for now it is water under the bridge (it may be a bridge over troubled water though).
Technically, the fall took the price down to and marginally through the 38.2% retracement of the move up from the 2019 low to the early December high. That retracement level came in at 107.704. The low reached 107.64. The inability to stay below that level at first was an "eye brow raiser" but the bias remained negative.
Where things started to turn was the move back above the 100 day MA at 108.19 area. That should not have happened.
The news helped support the move. Related markets also supported a rebound as gold lost it's luster, oil started to come down, and yields moved back up.
The next bullish signal was the move back above the 200 day MA at 108.62. That is now a risk/bias defining level for the pair. Stay above is more bullish
Drilling to the hourly chart, the yellow area is the space between the 100 day MA below and the 200 day MA above. On the run higher off the low, the price first extended above the 100 day MA, then corrected down to it before shooting higher. The last 4 hours has seen the price extend above its 200 day moving average (and stay above). As long as that level can hold support, the buyers have the control. Move below and the technical waters are muddy again.
On the topside, the high price reached 108.82. The swing high from January 2 comes in at 108.859 and the 61.8% retracement of the move down from December 26 at 108.90. Each are the next upside targets on more upside momentum.
The bias is more bullish technically back above the 200 day MA. However, the markets will remain in geopolitical mode which means headlines can impact market in an instant. Those types of markets are more risky as traders really don't know what may happen next. So be sure to define risk levels and know targets. The risk levels help define the bias and who is winning - the buyers or the sellers. The targets measure if the dominant traders are still winning and probing the directional bias.
So pay attention. The tide can come in and go out in an instant, especially in markets dominated by geopolitical news headlines.
