USDJPY Update February 2016 (D)
Created on Saturday, 06 February 2016 07:38
Written by Austin Galt
The USDJPY has retraced most of the move up from the January 2016 low and I now believe a good opportunity looms. Let’s revisit the daily chart.
USDJPY DAILY CHART
We can see the move up after the Bank of Japan negative interest rate announcement has been completely consolidated. Price is now free to make up its own mind about which direction it wants to take and I still favour that to be up.
The horizontal line denotes the January 2015 low at 115.93 and I would prefer to see that level hold price. If it doesn’t then the first low of the quadruple bottom formation at 115.56 should. Also, if the January 2015 low is taken out then price I would be looking for a marginal false break only with price surging back up and taking out the January 2015 high before the end of February.
The Bollinger Bands show price in between the lower and middle bands and it is certainly not out of the question for price to head to the lower band and bounce off there. This would mean price clips the January 2015 low.
If a higher low is setting up then this move down is not abnormal in that a deep retracement is often seen at the first correction in a new bull trend and this move down has already clipped the 88.6% Fibonacci retracement level of the move up from low to high this year.
I have drawn a Fibonacci Fan which shows the recent high at resistance from the 76.4% angle while price now looks to be finding support at the 38.2% angle so it is very possible that a higher low is already in place. This will need upside follow through to confirm however.
The RSI recent made a new high which is bullish and is now back down around the oversold area.
The MACD indicator is bearish although the averages have diverged somewhat and a move back up would rectify that.
Summing up, I believe price is now in a zone that represents a good risk/reward opportunity to go long.