After a huge loss...
The sellers took it to the USDJPY today - needless to say. Looking at the 5-minute chart, the price took a straight line tumble to a low of 108.69 from a high of 111.69. That is gone. The BOJ disappointed the market.
However, there is a price where sellers turn to buyers and the correction to the the high at 109.438 was where there was some buying (probably from shorts). Since that time, however, a second wave of selling took the price even lower to 107.907 low for the day.
The price action then started to show a more balanced market where buyers and sellers battle it out.
That sideways action allows for the 100 bar MA on the 5-minute chart to catch up (see blue line). When the price moved above that MA line, there was more buying as the price moved higher. The buyers won a small battle. They were able break the price above the MA line.
The next battle comes against the 38.2-50% retracement area. If the price can get and stay above that level, another small win for the buyers. They were able to extend the correction of the midpoint of the more normal market. If the price can get and stay above that level it is good for the buyers - especially those who bought above the 100 bar MA.
Where is the next battle area?
Well, for me the next major battle is the 200 bar MA on this chart (green line at 109.40 and coming down). That is a bit of a ways away So the 108.85 level might be an intermediate level (61.8% retracement).
When the market trends like it does, the price action will tend to normalize and battles ensue.Winning a battle like getting above the 100 bar MA is a victory but does not necessarily mean it is green lights to the upside again. If the price goes back below the MA line, sellers are back in control. However, it does help to define the markets intentions and also helps you define and limit your risk in the new....lower area.
