U.S. Congress In Action: Overnight USD/JPY Trading Preview

Today has been anything but exciting in the currency markets, but U.S. Indices have put on a show. Currently, the DJIA is up 200 points and S&P 500 has posted a remarkable day. Optimism following the House of Representatives' passage of President Trump’s tax reform plan is certainly evident in today’s trade.

A bit earlier, I issued a report on the S&P 500 and a trading plan for getting in on the bullish action. Price has not pulled back at all, with only a few pauses evidenced by compression on the 30-minute chart. The trade recommendation stands until the close today, perhaps a late pullback will produce a few green ticks.

USD/JPY Technical Outlook

Wednesday’s session was a beauty for USD/JPY bears, as price fell out of bed below several key support levels.

USD/JPY, Daily Chart

The Thursday session has brought a retracement of this action and subsequent failure, with the Bollinger Midpoint proving to be valid resistance. Here are the key levels for the remainder of the U.S. trading day:

• Resistance(1): Bollinger MP, 113.30

• Resistance(2): 38% Current Wave, 113.34

• Resistance(3): Daily SMA, 113.65

• Support(1): Wednesday’s low, 112.48

• Support(2): Psyche level, 112.00

• Support(3): October low, 111.65

Bottom Line: The extreme sell off below support on Wednesday is a signal of shifting market sentiment. With the presence of a Bollinger MP/Daily SMA crossover, and price failing at the 38% Fibonacci level of the current selloff, I expect the USD/JPY to grind lower as we near the end of the week.

Shorts from 113.24 with an initial stop above Wednesday’s high of 113.49 is a solid way to capitalize on bearish action. A 1:1 or 1:2 R/R is ideal here. If sellers enter the market in force from this level, price is poised to test the lower Bollinger Band and the 112.25-112.00 area.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

Related Articles

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments