USD/JPY was in the midst of a potential saucer – or rounding bottom – pattern. However, the mysterious Yen has struck again in the aftermath of the news that ECB is stopping lending to some Greek banks and its President Mario Draghi signaled the ECB won’t compromise on key principles to keep Greece in the euro area. This was enough for the traders to again flock towards the safe haven currency.
Yesterday, USD/JPY traded above the current resistance level 80.330 – low made on May 1st – and tried to take out May 2nd high of 80.612 only to close below the resistance level. Today, the pair traded below yesterday’s low thus negating the emerging saucer pattern, which was never completed.
In the wake of ECB news, the pair is firmly below the recent low of 79.432 made on May 9th and is staying within a down trending channel. In the process a new bearish ABCD pattern has emerged.
A = 81.780 on 20-Apr-12
B = 79.432 on 09-May-12
C = 80.552 on 16-May-12
AB = 234.8 PIPs
BC = 112.0 PIPs – 48% of A-B
The measured first target for D is 78.204. It will be within 70.7% and 78.6% retracement of the up move from Feb 1st low of 76.028 to March 27th high of 84.187. An aggressive short entry would have been when yesterday’s low was breached. The conservative entry would be when the May 9th low was taken out.