USDJPY stuck within tight trading range
US Dollar/Japanese Yen (USDJPY) Technical Analysis Report for Nov 20, 2020 | by Techniquant Editorial Team
USDJPY finished the week -0.75% lower at 103.86 after gaining 11 pips (0.11%) today. Trading up to 10 pips lower after the open, the Yen managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on November 11th, USDJPY actually lost -0.28% on the following trading day. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (USDJPY as at Nov 20, 2020):
Friday's trading range has been 21 pips (0.2%), that's far below the last trading month's daily average range of 69 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for USDJPY. Prices continued to consolidate within a tight trading range between 103.65 and 104.22 where it has been caught now for the last three trading days.
Prices are trading close to the key technical support level at 103.65 (S1). Prices are trading close to the key technical resistance level at 104.22 (R1). The FX pair found buyers again today around 103.70 for the third trading day in a row after having found demand at 103.71 in the prior session and at 103.65 two days ago.
Though the market 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 speed up should prices move above the nearby swing high at 104.22 where further buy stops might get activated. Selling could accelerate should prices move below the close-by swing low at 103.65 where further sell stops might get triggered. As prices are trading close to November's low at 103.18, downside momentum could speed up should the currency mark new lows for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for USD/JPY. Out of 159 times, USDJPY closed lower 55.35% 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 50.94% with an average market move of 0.04%.
With five out of the other six Major FX Pairs closing higher today, the ones that stand out on the positive side are AUDUSD gaining 0.29% and NZDUSD closing 0.25% higher. On the flipside the worst performer has been EURUSD closing -0.15% lower. Looking at the Minor FX Pairs and Crosses, the winners of the day have been USDTRY surging 1.11% and EURTRY closing 0.86% higher. The worst performers of the day have been TRYJPY tanking -1.02% and USDMXN closing -0.48% lower. Read more