JPYUSD closes below its opening price unable to hold early session gains
Japanese Yen/US Dollar (JPYUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, JPYUSD ended the week -0.54% lower at 0.009290 after edging lower 3 pips (-0.03%) today on low volume. Trading 26 pips higher after the open, the pair was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (JPYUSD as at May 22, 2020):
Friday's trading range has been 38 pips (0.41%), that's below the last trading month's daily average range of 56 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for JPYUSD. Prices continued to consolidate within a tight trading range between 0.009261 and 0.009318 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Bearish Spinning Top which are both known as bearish patterns. The last time a Bearish Spinning Top showed up on April 15th, JPYUSD lost -0.44% on the following trading day.
Unable to break through the key technical resistance level at 0.009315 (R1), the FX pair closed below it after spiking up to 0.009318 earlier during the day. The failure to close above the resistance might increase that levels significance going forward.
While JPY/USD is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the nearby swing low at 0.009252 where further sell stops could get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Hikkake Pattern" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for JPY/USD. Out of 141 times, JPYUSD closed higher 51.06% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 56.03% with an average market move of 0.18%.