USD/JPY Trades Lower After False Breakout

Talking Points

• The USD/JPY Retraces After a False Breakout
• Bearish Breakouts Begin Under 111.92
• SSI Increases in Value to +1.96

USD/JPY 30 Minute

(Created using Marketscope 2.0 Charts)

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The USD/JPY has turned lower this morning, after initially attempting a bullish breakout above key values of resistance. Today, bullish breakout was marked by a move above the R4 pivot point, which is found at a price of 112.77. However, with prices now trading below the R3 Camarilla Pivot at 112.55, it suggests that any bullish momentum may at least be temporarily suspended. With the USD/JPY turning lower, it also opens the pair up to test key points of support. It should be noted that today’s S3 pivot is found at 112.13, which is acting support for today’s 64 pip trading range.

It should be noted that if prices continue to decline, bearish breakouts begin below 111.92. A close in price below this value would be significant as the USD/JPY has close higher for the four preceding trading sessions. Traders looking for a bearish breakout may consider extrapolating 1X todays range to put initial targets near 111.28.

SSI (Speculative Sentiment Index) for the USDJPY is currently reading at +1.96. When SSI is read as a contrarian indicator, this may suggest that the pair is setting up for further declines in price. Trend traders looking to trade the USD/JPY should continue to monitor SSI. If SSI reaches an extreme of +2.0 or higher, it would add validation to any emerging downtrend. Conversely a flip in SSI to a negative value, may suggest a move towards more bullish market conditions.

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original source

By: Walker England, Forex Trading Instructor