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, City Index
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, City Index
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.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.