Fibonacci Support In View For USD/JPY

Posted Wednesday, October 2, 2019 by
Shain Vernier • 2 min read

Safe-havens, led by gains in gold, as well as losses in the USD/CHF and USD/JPY are on the march. Sentiment is becoming toxic on Wall Street, as illustrated by a 550 point mid-session plunge in the DJIA DOW. Barring a major turnaround, U.S. stocks may be in for a sobering first week of October.

For the third straight day, President Trump has lit up the House of Representatives’ impeachment proceedings on Twitter. Democratic leaders Schiff and Pelosi were the primary recipients of this morning’s tweets, but Trump did weigh in on the intraday sell-off:

“All of this impeachment nonsense, which is going nowhere, is driving the Stock Market, and your 401K’s, down. But that is exactly what the Democrats want to do. They are willing to hurt the Country, with only the 2020 Election in mind!”  

To a certain extent, Trump is right. The impeachment process is politically motivated and will be a primary market driver until the outcome is clear. When coupled with recession fears any developments from Capitol Hill will magnify market volatility.

Of course, when risk-off becomes the strategy of the day, safe-havens benefit. That is the case for the Japanese yen, as the USD/JPY is off more than 60 pips on the session.

Fibonacci Support In View For The USD/JPY

Since the calendar flipped to October, the USD/JPY has been on the bear. Rates are off more than 130 pips through the first 48-hours of the new month.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

For the near future, there is one daily support level on my radar:

  • Support(1): 62% Retracement Of September’s Range, 106.78

Bottom Line: Today’s safe-haven performance is robust and will likely continue for the immediate future. With a bit of luck, the USD/JPY will put in a test of 62% Fibonacci level before changing course.

Until elected, I will have buy orders queued up from 106.84 in the USD/JPY. With an initial stop at 106.54, this trade produces 30 pips on a standard 1:1 risk vs reward ratio.

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