USD JPY Testing Major Support Cluster This Morning

The USD JPY completed a 50% correction of last week’s“Intervention Rally” and is now resting on a 50% level and Gann angle supportcluster at 84.40 – 84.38.

The USD JPY completed a 50% correction of last week’s“Intervention Rally” and is now resting on a 50% level and Gann angle supportcluster at 84.40 – 84.38.

This configuration represents a balance point on the dailychart which is being supported fundamentally. In other words, something bigcould happen today. At this time, this cluster is acting as support becausesome traders believe that Japanese officials are poised to intervene. Last weekthey intervened during the Asian session, so it’s highly unlikely that theywill intervene with New Yorkopen. Nonetheless, holding the support zone suggests that traders arerespecting the possibility of an intervention.

Secondly, a failure to hold this support cluster couldtrigger a sharp break to the downside with the Fibonacci level at 84.04 thelikely target. This should occur if ahard equity market sell-off triggers a flight to safety rally in the JapaneseYen.

It is highly suggested that traders watch the order flow at84.40 – 84.38 to see if there is a pick-up in activity. Volatility could increase if this zone ispenetrated with conviction.