After it has been fueled by the risk aversion return, USDJPY recovered on the news of a record Japanese current account balance deficit in 13 years and Japanese exports showing a whopping 43% y/y slump. CFTC data for Tuesday March 3rd revealed that investors have continued to reduce net long JPY spec positions, which are now about half of their end January levels.
How does these news impact on the yen ?
I based the news impact employing the fibo analysis and candlestick pattern. See the chart below
At the points of reversal, it was painted with a reversal candles pattern.
Point A- morning star
Point B- harami
Point C-engulfing
Point D- shooting star
Pont E- morning star/hammer
Point F- dark cloud cover
Point A (23:45 GMT) – the above economic reports was released at 24:00 GMT, USDJPY shot up to B on the bad news. The prices corrected badly by 76.4% to C. Prices than expand upward during European session up to point F (11:45 GMT or 15 min before US session open).
Point F is a 100% fibo projection (expansion) of A-B swing (the first reaction on the economic news), with projection taken from the top of B.
It is also a 100% fibo projection of C-D swing with the projection taken from the point E.
I began my scalp trade at one hour before US session open i.e. 11:00 GMT and using level F as the turning point I look for a short entry. With Point F at about 99.20 my first target will be 99.00 which is about 23.6% retracement of E-F swing. Breaking that level will be the second target at 38.2% retracement at 98.91 and the final target will be within the 50%-61.8%retracement. I am looking more on the round number i.e. 98.80 which is the 50% level.
