USD/JPY Technicals – Missing 100 by a hair

What is so scary about 100? Every single students taking exams would love to attain the perfect score. Even artistic thespians would love critics to give them 100/100 for their plays and acts. What about Japanese politicians? They would love to see USD/JPY go all the way to triple digits. So can somebody please tell me why bulls are not interested to claim the 100.0 landmark after coming so far from ~80 6 months ago? Prices reached a high of 99.946 on OANDA platform yesterday, slightly more than 5 pips below the 100 round number and it is highly unbelievable that bulls can’t muster up the strength to overcome the few pesky pips.

So what gives?

Using OANDA’s Historical Open Orders we can see that there are strong number of sellers just around 100.0. In fact, the number of sellers above 99.0 was very significant, which explains the lack luster showing by the bulls for the past few trading days. However, just because there are sellers there does not mean that price cannot go higher. Looking at 4th April, when BOJ’s announcement pushed price higher – the number of sellers around 97.0 was significant, however price managed to break through the thick red band and subsequently the top side totally opened up, allowing bulls to enter to 99.0 relatively easily. The same could also happen with regards to 100.0, should bulls manage to break 100.0, there are very few sell orders between 100.0 to 102.0, meaning that bulls may be able to push greatly should there be a breakout higher. However, in the meantime 100.0 shall remain a significant resistance.

Hourly Chart

From a technical basis, we can see price inching higher slowly but surely. The Rising trendline that connects all the recent dips is inching closer to towards 100.0, and we could see a breakout on either side being forced eventually. Stochastic readings suggest that price may break to the downside as readings are still firmly going lower. However looking at all recent troughs, the extend which this bear cycle may move may be limited, resulting in price most likely finding support around 99.0 or perhaps around 98.5 (which is also confirmed by Open Orders chart above). Should a breakout lower occur, bears may wish to see if there is any attempt to push back above the trendline. If recovery efforts fail to do so, we may be seeing the first truly bearish signal post BOJ announcement.

Daily Chart

Daily Chart is more encouraging with readings popping up of the rising Channel. However we did not witness a strong bullish breakout towards 100.0. Instead it felt as though price broke an engine in the attempt to break Channel Top, resulting in the bull cart sputtering while hanging onto the rising trendline for support. Stochastic reading is barely remaining flat, and a decline in Stoch reading is likely especially if price dip back into the Channel and head towards Channel Bottom.

BOJ’s Kuroda has indicated that he is done for 2013. Hence current bulls will need to rely on their own inherent strength to pull price towards 100.0. Will this be sustainable and allow price to maintain bullish bias above 105? It seems highly unlikely, but bulls may have a friend in Risk Appetite. Record highs for US stock indices will certainly help risk appetite to push Yen lower for the time being. 100.0 is still an achievable target, but beyond that, bulls are on their own.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.