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USDJPY breaks 111 and looks to go lower

Market Analysis

USDJPY, Daily                   

USDJPY printed near two-week lows of 110.67, yesterday before recovering to close at 110.82. There is a softer risk backdrop which prompted selling into the NY close. N. Korea missile test activity has continued, keeping the region on a nervous footing, and supporting the safe-haven yen in the process. In addition, U.S. equities were softer and Treasury yields were lower, also yen-positives. Overnight, the pair triggered SHORT positions on both 4hour and daily timeframes.  Entry was at 110.90 with target 1 on the 4 hour chart at 110.60, beyond the recent fractal low and equal to the 14 period ATR. The Daily chart target is beyond the 200 day moving average (which is likely to provide resistance to the move down) at 109.90. Both charts show price below the key 20 period moving average and in the lower half of the downward sloping Bollinger bands. RSI and the Parabolic SAR both remain negative on both charts too. These positions have stop loss levels set at 111.26 (4H) and 112.52 (daily).

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Stuart Cowell

Senior Market Analyst

HotForex

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