USDJPY breaks back below 20-day moving average
US Dollar/Japanese Yen (USDJPY) Technical Analysis Report for Oct 16, 2020 | by Techniquant Editorial Team
USDJPY ended the week -0.2% lower at 105.41 after edging lower 4 pips (-0.04%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (USDJPY as at Oct 16, 2020):
Friday's trading range has been 28 pips (0.27%), that's far below the last trading month's daily average range of 47 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for USDJPY. Prices continued to consolidate within a tight trading range between 105.04 and 105.53 where it has been caught now for the last three trading days.
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 trading down to 105.19 earlier during the day, the forex pair bounced off the key technical support level at 105.20 (S1). The failure to close below the support could increase that levels importance as support going forward. When prices bounced off a significant support level the last time on October 2nd, USDJPY gained 0.40% on the following trading day. USD/JPY closed back below the 20-day moving average at 105.47. The currency ran into sellers again today around 105.47 for the third trading day in a row after having found sellers at 105.49 in the previous session and at 105.53 two days ago.
Although the pair is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 105.80 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 105.04 where further sell stops might get activated. As prices are trading close to October's low at 104.94, downside momentum could accelerate should the Yen mark new lows for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 20" stand out. Its common bearish interpretation has been confirmed for USD/JPY. Out of 171 times, USDJPY closed lower 53.80% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 52.05% with an average market move of -0.05%.
With four out of the other six Major FX Pairs closing higher today, the ones that stand out on the positive side are NZDUSD gaining 0.14% and GBPUSD closing 0.1% higher. On the flipside the worst performers have been USDCAD closing -0.27% lower and AUDUSD losing -0.2%. Looking at the Minor FX Pairs and Crosses, the winners of the day have been EURNOK surging 0.37% and USDNOK closing 0.36% higher. The worst performers of the day have been USDMXN tanking -0.65% and CHFZAR closing -0.54% lower. Read more