Getting Ready for A Long Term FX Signal in USD/JPY
Skerdian Meta • 2 min read
As we know, the USD is getting the crap kicked out of it. There’s no real reason for the US Dollar to be dumped like this but that’s what’s happening. It was the end of the year and the beginning of a new one, so forex traders are trying to get positioned. The thing is, they are getting positioned against the USD quite often recently, which doesn’t look good for USD bulls.
However, big moves bring into pay some big levels. Just like EUR/USD which is approaching the long term resistance at 1.21, USD/JPY is getting close to a major support level.
The daily chart is becoming oversold
This level comes at 112. This area has provided support twice in December with the price jumping higher after touching this level. The first time, stochastic was not even close to being oversold.
This time, the stochastic indicator is approaching the oversold area. By the time the daily candlestick closes tonight, I’m sure stochastic will be oversold. It is a big bearish candlestick which pushes stochastic drastically lower, so if the candlestick closes like it is now, tomorrow stochastic will be well oversold.
Although, today’s bearish candlestick looks pretty scary for buyers, as I mentioned above. So, I think that it’s better to observe the price action tomorrow and see how this pair behaves around 112.
Besides that, now the moving averages are catching up. The 100 simple (green) and smooth (red) moving averages are just a handful of pips below 112. So, tomorrow they will have reached this round level which will add additional support to it.
We’re about 10 pips above now and by the looks of it, I can say that the sellers have stopped right here. So, they are aware of this level. If tomorrow’s candlestick closes as a doji or a pin, then it will be the reversing signal we need. But, we have to wait a few sessions from now to get that confirmation since we are trading the daily chart. So, JPY traders, see you tomorrow with a new trade here, hopefully.