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USDJPY Scalp Bias Reverses on Sunday Gap- Levels Ahead of FOMC

USDJPY Scalp Bias Reverses on Sunday Gap- Levels Ahead of FOMC

Michael Boutros, Strategist

Talking Points

  • USDJPY correction gaps into support ahead of FOMC
  • Scalp bias shifts to the long side above 98.42
  • Updated scalp targets and key thresholds heading into this week’s major event risk

USDJPY Daily Chart

Forex_USDJPY_Scalp_Bias_Reverses_on_Sunday_Gap-_Levels_Ahead_of_FOMC_body_USDJPY_Daily.png, USDJPY Scalp Bias Reverses on Sunday Gap- Levels Ahead of FOMC

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • USDJPY gaps lower on the Sunday open into interim Fib support 98.75
  • Maintains ascending channel formation dating back to August lows
  • September open still intact at 98.42- Scalp Bias Bullish above this mark
  • Topside objectives at 99.84/92, 100.58, 100.97 and 101.59.
  • Break below 98.27 (September opening-range low) Scalp Bias Neutral
  • Key support range 97.65/73- Bullish Invalidation
  • Support Break targets primary objective range 96.55 - 96.74
  • Secondary support ranges 95.37 – 95.43
  • Daily RSI 50 hold would be supportive- 60-Breach to offer conviction on long bias
  • Key Events Ahead: FOMC on Wednesday

USDJPY Scalp Chart

Forex_USDJPY_Scalp_Bias_Reverses_on_Sunday_Gap-_Levels_Ahead_of_FOMC_body_USDJPY-_Scalp.png, USDJPY Scalp Bias Reverses on Sunday Gap- Levels Ahead of FOMC

Scalp Notes: Last week we outlined our broader USDJPY setup with our near-term focus shifted to the downside after achieving a clean tag of the 61.8% Fibonacci extension taken from the late-June advance at 100.58. We noted that with, “daily RSI now failing as second attempt at breaching the 60-threshold caution is warranted, with an impending trendline support break in the oscillator suggesting a near-term correction lower may be in the making. Bottom line: we may get a short-term correction but remaining constructive above 98.56/75 with only a break (and close) below 97.65/73 (three way Fib confluence) invalidating our broader bullish outlook.”

The Sunday-gap open has immediately shifted our focus higher with the break back above the 98.56/75 range putting long scalps back into play. Note that we continue to trade sub-trendline resistance dating back to the monthly high with a breach above offering further conviction on our near-term directional bias. We’ll lighten the lot sizes as we head into Wednesday’s FOMC policy meeting where we’ll get the updated quarterly projections from the committee as they pertain to growth, inflation, and interest rates. Note that this event represents significant event risk and will likely fuel a surge in volatility.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

30min

99.27 – 99.33

38.2% % 61.8% retraces / 100% Fib Ext

Bearish Invalidation

30min

99.50/55

Soft Res / Pivot / opening-range high

Break Target 1

30min

99.78

61.8% Retracements

Break Target 2

30min

100.14

78.6% Retracements

Break Target 3

Daily / 30min

100.58

61.8% Fib Ext / Monthly High

Break Target 4

30min

100.87

88.6% Retracement

Break Target 3

Daily / 30min

101.52/59

78.6% Retrace / July High

Support Target 1

30min

98.95/98

61.8% Ext / 23.6% Retrace

Bullish Invalidation

Daily / 30min

98.56 – 98.66

38.2% & 50% Retracements

Break Target 1

30min

98.37

100% Fibonacci Ext

Break Target 2

30min

98.00

Big Figure / Soft Support / Pivot

Break Target 3

Daily / 30min

97.65 – 97.72

61.8% & 50% Retrace / 38.2% Fib Ext

Break Target 4

30min

97.38

1.618% Fibonacci Ext

Break Target 5

Daily / 30min

96.73 – 96.82

61.8% & 78.6% Retracements

Average True Range

Daily

91

Profit Targets 22-24pips

Review today’s Scalp Webinar for further insights and current trade setups

Trade these setups and more alongside DailyFX with Analyst on Demand

For updates on this scalp and more setups follow Michael on Twitter @MBForex

---Written by Michael Boutros, Currency Strategist with DailyFX

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael Tuesday, Wednesday and Thursday mornings for a Live Scalping Webinar on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

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