USDJPY makes the downside break

We’ve been warning that USDJPY has been looking very bearish recently and now after several attempts around 112.00, we not only properly broken 112.00 but we’ve now broken the strong looking support around 111.70/80.

USDJPY daily chart

USDJPY daily chart

That has now opened the door for a deeper push down. The 111.40 late Sep lows is one target but otherwise we could see a test of 111.00, and another former strong S&R level at 110.90/95.

This push has given bears some added impetus and thus we’ve already been down to a 111.55 low. The bears will now want to see resistance forming around 111.70/80, and if that breaks, 112.00. A close below 111.70 would keep the bearishness intact.

Where can we go from here?

The ball is in the sellers court but most likely it won’t be an easy ride down. Desk chatter is that importer bids are lurking down here and if they follow the usual MO, they’ll be layered down some. We should also keep our ears to the ground regarding hearing about barrier options down around 110.00. That’s pure conjecture on my part but it’s a prime spot for such action.

We well and truly cemented another strong top in the 114’s so it’s only natural that we test out the range lows. That could mean a push to the 108 area. That’s still a long way away and there’s plenty to get through before there. This weakness in USD is telling as we’re still in the midst of the Fed hiking, and the Donald still trying to get his tax plan through. What is does show is that the market is discounting those effects in the dollar. For me, this pair has been a rally seller for a while and there’s nothing to change that fact at the moment. I wanted a decent level to short but one didn’t come so I’m watching from the sidelines for now. I may look for a tight short on a bounce to 111.70, or else a long from the support around 111.00.


Ryan Littlestone

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