USD/JPY Fades Pfizer Move, but May Be Ready for a Bounce
Joe Perry November 17, 2020 5:02 PM
Technically, traders may see a good risk/reward opportunity near current levels.
The positive Pfizer vaccine news from last Monday caused a spike in USD/JPY, as the pair moved from 103.30 up to 105.35, a gain of 205 pips! However, as shown by the price move in USD/JPY yesterday, positive vaccine news may already be priced into the pair. USD/JPY opened at 104.60 and closed at 104.07, a loss of 53 pips. Technically though, traders may see a good risk/reward opportunity near current levels.
On a daily timeframe, USD/JPY has been moving lower since the March 24th highs at 111.715 in a descending wedge formation and is currently nearing the apex of the wedge. On November 4th, the pair pushed lower through horizontal support, and tested the bottom trendline of the wedge.
Source: Tradingview, FOREX.com
On a shorter, 60-minute timeframe, traders can see the large move from the bottom trendline of the wedge to the topline of the wedge. But notice the price action after the positive vaccine news from Moderna. Price did spike higher but was quickly faded. USD/JPY now sits at the 61.8% Fibonacci retracement level from the low to high on November 9th. In addition, it is sitting just above horizontal support near 104.00 and the RSI has just moved from oversold territory back into neutral territory.
Source: Tradingview, FOREX.com
Bulls will look to buy between 104 and 104.20, targeting the top trendline of the wedge and place stops below the horizontal support just below. If price breaks below 104, watch for bears to sell retests of the 104.00 area, targeting the recent lows at 103.20 and then the downward sloping trendline, with stops above 104.00.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.