1. Please see my post on risk on risk off for the London session here: Risk on Risk off London Session
2. Technically we can agree that price fell from the top of the trend line on the daily chart as shown and made a lower low. Price then came up and made a lower high as seen on H4. Price fell though has not made a lower low – instead it moved up from support as indicated on the H4 chart.
3. At this level of support we see price made a higher high on H1 and is currently moving towards support which could be the setup for a 123 reversal
4. An aggressive bull would first identify if we are in risk on or risk off mode and then if the market is risk on and we see confirmation of support at DM2, would look to enter.
5. A conservative bull would wait for a break of DPP and then buy the role reversal.
6. Should you be a bear then a conservative bear would wait for a break of the support at DS1 and then sell the role reversal or lower high.
7. Fundamentally – In last night’s FOMC speech, Brainard was dovish, well she is a dove so it’s expected. Her comments indicated that America is getting there though that it is taking time. Her comments did not suggest that America is in any trouble though a rate hike is certainly not likely next week. Further data will support the chance of a rate hike at future FOMC meetings. So if there is no rate hike then how could Yen be weak – well the US is not in trouble, according to her speech, and maybe the market sees the ECB having done nothing, FOMC not likely to act so perhaps they are expecting the BOJ to do something at their next meeting. Alternatively, America not raising rates due to them waiting to be ready is not necessarily a sign of USD weakness but simply a sign that the path is gradual. The market will certainly be eyeing out the Retail Sales data out of America this Thursday.

Note:
a. Please read Kate’s post on Forex Major Currencies Outlook everyday so you are up to date with the latest news. You can follow Kate here
b. Please be aware of risk events for the day by using the Forex.Today calendar
c. Watch Wayne’s webinar daily at 13:30 SAST or catch the recording on the Forex.Today Youtube Channel

USDJPY Daily

USDJPY H4

USDJPY H1

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