Talking Points
- Sunday open gap-fill puts focus on weekly opening range
- Short scalps favored within near-term technical formation
- Event Risk on Tap
USD/JPY Daily
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- USDJPY remains within consolidation range off the December high
- Sunday open gap into 2-week lows is filled & is now pulling back- bearish
- Interim resistance at 118.04/18 (scalp bias bearish invalidation) & 118.87/92
- Support objectives at 116.15 / December trendline- Key support 115.47/50
- Daily momentum support trigger pending
- RSI break sub-40 would be bearish (last 40-break June 2013)
- Event Risk Ahead: US Factory Orders tomorrow, ADP & ISM Wednesday & NFPs, Unemployment Rate on Friday
USD/JPY 30min
Notes:USDJPY filled the Sunday open gap before turning over just ahead of the 118-handle. The focus now turns to the break of the weekly opening range with the pair continuing to trade within the confines of a descending pitchfork off last week’s high. We’ll define the initial opening range as 116.76 - 117.86 with shorts favored while within the current operative formation.
Bottom line: Our short scalp bias remains in play (looking to sell rallies / short-triggers in momentum) while below the upper median line parallel with only a breach above 118.04/10 invalidating the immediate outlook. Such a scenario targets 118.47/50 and more significant resistance at 118.83/92. Look for a break below the 117-figure / median line to open things up with targets eyed at 116.48 & 116.08/15. Caution is warranted heading into key US event risk later in the week with the release of the January Non-farm Payroll numbers likely to fuel added volatility in USD & JPY crosses. A daily average true range (ATR) of 134pips yields profit targets of 33-35 pips per scalp.
* 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.
Relevant Data Releases
Other Setups in Play:
- Scalping EURAUD Breakout- Longs Favored Above 1.44
- GBPAUD Weekly Opening Range Setup- Long Scalps at Risk Sub-1.92
- Scalping the AUDCAD Reversal- Shorts Favored Below 9928
- Gold Stalls at Technical Resistance- Remains Constructive Above 1262
- Scalping NZD/JPY Breakdown- Shorts Favored Sub 90.00
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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