USDJPY has been like a super freight train out of control in its bullish trend. This has been so impressive that most in the trading world are now extrapolating this into the future and eyeing 124 and above.
Whilst these level might still be reached in the future there are enough reasons to expect a decent pull back to offer shorting opportunity for the following reasons:
1. Bullish sentiment is too extreme for the USD strength. 2. BOJ representatives are making the noises that YEN has weaken faster than they anticipated and possibly for their comfort. 3. Based on TA we could see that we clearly reached the extreme of the rising pitchfork that has contained the price action since 2012 low. 4. we have (from 2012 low to - May 2013 high) AB=CD (applied from June 2013 low ) measured move that coincide with recent top. 5. we have Sep - Oct retracement swing Fib extension of 3.382% at recent high with clear RSI divergence. 6. The steep uptrend defined with narrow rising channel has been broken convincingly. 7. Recent violent drop in price could be impulsive, compared with the bounce of the spike low yesterday which has retraced 50% of the decline.
If all above holds then at least 50% -61.8% retracement of the October to recent high could be expected if not more. That would give us potential 113-110 zone
Clear lower lows have been formed on Hourly which can offer manageable stops for planning short trades.
please see further charts on shorter term below for illustrating the above.
Now it remains to be seen how the price progresses. As always do your own analysis before engaging in any trades rather than just relying on my observation.
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Thank you for your time and for reading my analysis.
Hey Dan, it seems likes usdjpy skyrocketing in Asian time. What about the news of the election ?
Sam0101
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With this i think the correction (117.8) is done and bullish scene starts?
Sam0101
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which means use/jpy is heading to 115?
DanV
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All the indication suggest USD has either topped or at least established a temporary top. However, after nearly 5-6 months of this bullish leg in DXY even if this is going to be retracement it is likely to last for several weeks if not months. To illustrate take not of the YEN futures chart below, all featured noted suggest that YEN could regain strength resulting in USDJPY dropping a good amount. Namely 117 initially and then any bounce could be just retracement to form H&S pattern, otherwise 117 will be take out with speed and power in which case it could become resistance. This is regardless of the outcome election results. Will be following the progress we keen anticipation.
IvanLabrie
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Unless they just fiddle with price like they do in Argentina for instance...manipulation is real, I wouldn't discard the 'fundamentals' just like that.
I do agree with DXY topping though. :)
DanV
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Agree with your comment. The issue with the fundamental is always a question of how much is already in price and how much is yet to come.