American Congress didn’t manage to vote in favor of changes in Obamacare which is clearly problematic for bulls on US dollar. Repealing of Barack Obama’s health care law was one of the main points of Donald Trump’s fiscal policy plans, but without full backup of Republican party Trump’s helpless. This political failure means two things – we still can’t be sure of future form of American budget and this uncertainty alter US dollar. USDJPY deepens this year’s low. The question is – where to sell?
Two last months of last year brought us obvious bullish trend on USDJPY. In about 30 days pait made over 1450 pips, forming double high at 118.50. Since then we’re still in corrective move last over three months now. Ironical, FOMC hike brought more bearish sentiment than most of us thought, creating a new lower low on USDJPY chart.
We’re still in ABC corrective structure which can be seen on daily interval:
So, in a longer term – we’re still in an upward trend but breaking through low marked A means that current bearish sentiment might last another couple weeks. The question is – where bulls might get more active?
Measuring last bullish impulse and the AB move, we can state one interesting level which might be a destination for bears. Confluence of two important Fibonacci levels (61.8 retracement and 127.2 expansion) points at 106.70 area as a probable support zone on USDJPY chart:
Potential for further fall is satisfactory but lets resume to main question of this analysis – where to sell USDJPY?
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The answer might be simple – it’s 111.17/35 area. As we can see on the previous chart, there are Fibonacci levels too. But also, this resistance zone is close to psychological level of 111.00. Weekend gap on USDJPY is still open and – quess what – it’s in the zone! Selling USDJPY around 111.25 (which is the middle of resistance zone marked red) might be a good idea while risk of bigger loss is mitigated, and potential reward is interesting.
