Two days ago we looked at the USDJPY. The pair was in the process of breaking free from a trend line that had capped advances since January 27th. Buyers managed to hold the line just in time for the 5 pm EST close.
However, with the 115.10 handle still intact, I decided to remain on the sideline. I also didn’t want to enter in front of today’s non-farm payroll report.
The 115.10 area has served as a pivot since January 6th. It’s also the 50% retracement from the December 2016 high to the current 2017 low.
So far, the reaction from today’s events is mixed, and the jury is still out. The moments following the NFP report and average hourly earnings, market participants seemed to favor the U.S. dollar. But those gains were short-lived.
As is the case with any high-impact event such as NFP, momentum can shift in a matter of minutes. This is one reason I urge caution to those who like to trade market-moving events like these. In fact, the best course of action is to take no action until the dust settles.
So for now, the prudent thing to do is wait it out. Considering the pair is currently grappling with the 115.10 area, we won’t know which side to favor until the session close at 5 pm EST.
A bearish pin bar from this area would likely result in a move lower next week toward the trend line near 114.20. Alternatively, a daily (and weekly) close above 115.10 would expose the 117.00 handle, a region that acted as a pivot between December 19th and January 9th.
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