Price Action Overview
Early today, we were expecting a push up on the USDJPY pair. but we got a USDJPY Direction Change instead. We based our assumptions on the three small bodies from previous days and, especially, the Doji-like hammer pictured yesterday.
We were willing to buy this market above 113.70, but it didn’t offer us that chance. The pair is falling heavily, currently -0.72% off yesterday’s latest price.
Then, from this fact, we can observe that the pair’s latest top is a lower high. A high that didn’t touch even its strong 114.500 resistance level. As of now, the price action has also pierced the Bollinger Band mean line. Finally, the MACD has shifted to a bearish phase.
That price action seems to originate from the weakness on Dollar Index today after its price touched the top of the wedge formation last Monday. Weakness whose origin was the Brexit Agreement between The United Kingdom government and the Union, and on the positive political news today for PM Theresa May.
Technical Scenario
We think the price action short-term might carry the value of this pair to the low of this ascending channel, challenging the 112 level, which corresponds to the -2 Bollinger band line.
We should watch the price behaviour at that level because as we see on the USDJPY chart below, superposed to the green ascending channel, there is another horizontal channel limited by two powerful key levels: 114.50 and 108.00.
If the weakness on the pair holds after arriving at 112, we may see a continuation to the 108 level.
Below, the US Dollar Index Daily Chart for comparison and analysis.
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