Technical Analysis USDJPY : 2014-02-04


Good afternoon, dear traders. Today at 16:00 GMT (GMT + 0) we expect the monthly rate of change in orders for durable and nondurable goods. This is a key indicator of the U.S. manufacturing activity, which has a high predictive power - Factory Orders m/m includes the previously announced figure of durable goods. The uncertainty can only be associated with the second component, which rarely goes contrary to the main trend. In this regard, before the Institute of Food Supply U.S. releases these data, we would expect the market reaction in the form of the U.S. currency. The projected figure should fall to -1.9 % from 1.8% for the previous month.

Today we watch the USD/JPY on the H4 chart. We believe that the price structure indicates a bearish investor sentiment. In support of this point of view, we consider the following arguments :

1. We see that the price broke the weekly uptrend support line on January 23, which lasted more than two months. At the moment, the price is within the boundaries of the H4 and D1 trends – a confident sell signal; 2. The RSI(14) follows the qualitative structure of the price movement - downfall within H4 and D1 trends; 3. The ParabolicSAR is located above the price and confirms the H4 trend line; 4. The price crossed the Pivot signal line downwards and fixed below it.

All the above arguments suggest that the most likely scenario the USD/JPY downfall on anticipation of the Factory Orders m/m, as well as it is possible after the publication of the indicator. It is recommend to place a pending order to sell below the nearest low at 100.731 . The first target is determined by the Fibonacci system and confirmed with the first Pivot support at 100.373. It is recommended to hold the position only until the Factory Orders m/m publication. We also recommend to switch the position into the break-even condition 15 minutes before the news and to keep holding the position only if the indicator is not higher than the expected -1.9 %. Note the signal from the RSI(14) - the confident price movement down is possible only before it reaches the support level (21%). The most careful and patient traders are recommended to move the stop every 4 hours after the SAR. Others may limit the risks around 101.394. This is the closest minimum, which is confirmed by the Pivot signal level.

Directiondown
Position openingbelow 100.731
Targetabove 100.373
Preliminary stop lossabove 101.394
Note

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