JPYZAR finds buyers at key support level
Japanese Yen/South African Rand (JPYZAR) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
JPYZAR finished the week -5.7% lower at 0.1637 after edging higher 3 pips (0.18%) today. 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 (JPYZAR as at May 22, 2020):
Friday's trading range has been 35 pips (2.14%), that's below the last trading month's daily average range of 41 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for JPYZAR.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving lower in the previous session, the currency managed to close higher but below the prior day's open, forming a bullish Harami Candle. Additionally, one bullish candlestick pattern matches today's price action, the Bullish Spinning Top.
After trading down to 0.1629 earlier during the day, the market bounced off the key technical support level at 0.1634 (S1). The failure to close below the support might increase that levels importance as support going forward. After having been unable to move lower than 0.1626 in the previous session, JPY/ZAR found buyers again around the same price level today at 0.1629. The last time this happened on April 24th, JPYZAR actually lost -1.24% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 0.1719.
Although the forex pair 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 speed up should prices move below the nearby swing low at 0.1626 where further sell stops could get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for JPY/ZAR. Out of 107 times, JPYZAR closed lower 54.21% of the time on the next trading day after the market condition occurred.