Closed at 103.29 yesterday

Whereas the EURUSD found sellers against the 100 day MA (see prior post), the USDJPY was not so kind to the traders leaning against the MA support level.

Looking at the 4 hour chart above, the 100 day MA is overlayed at the 102.818 level (blue step line in the chart). Also at the level is the 50% of the move up form the September 27 low at the 102.802. Looking back to October 10, the low came in at 102.804.

So:

  • 100 day MA at 102.818
  • 50% at 102.802
  • October 10 low at 102.804.

Strong support, right. Well that support level gave way, the price went lower and then rebounded. It is now back above all that stuff at the 102.80 below AND also above the 200 bar MA on the 4-hour chart at 103.00.

Why did it just not continue lower?

You can attach stories to the move higher.

  • Less concern about Trump
  • FB sold off hard but steadied.
  • European stocks higher.

How about technicals?

If the price moves below such a key level with lots of stuff at the same level, shouldn't the sellers push it lower? Yes, of course, but what if what SHOULD happen, does not happen. Well, it tells you something.

Looking at the 5-minute chart (see chart below), you can see what ACTUALLY happened.

  • The price moved below the 103.82 level.
  • The price moved to 102.53.
  • The price rebounded to 102.82 area (the high ticked to 102.84),
  • The price moved lower to 102.58.

Then what happened? The price moved above the 102.82 level and stayed above. At that moment, red flags go up for the shorts. They start to question the break. and they give up.

It stinks when the selling breaks a key level and if you are short you expect lower levels/if you sell on the break you expect lower levels. However if the market does not do what it should do on that key break, you have to bite the bullet and get out (you may even turn your mindset around).

It is part of trading to recognize when the market is not doing what it should do The break of such a key level at the 102.8082 did not do what it should have done. The only conclusion we can make as a trader when this happens is to get out and look for the next trade.