A correction or Yen Haven

USDJPY was  toppish at 98.71 on  26^th February (17:00 GMT) before it went sliding downward with lower high and lower low. The steady Yen  since last Friday was surprising since its Asian neighbors’ currencies  were beaten by the dollar. 

It was widely rumored that the recent rally in USD/JPY and EUR/JPY may have been helped by what in the past has been termed “stealth” intervention. Over the years the BOJ has employed countless methods to weaken the JPY, including buying USD/JPY through proxies rather than intervening directly in the market.  One piece of evidence that this might be the case is price action in the US Treasury bill market of late. If the BOJ has been buying dollars, they likely are parking them in bills. 

The correction for the since last Friday was due to technically overbought in USDJPY cross or it could be that  familiar risk aversion correlations fell back in line on Friday , with the Yen rallying in the face of an escalation in fear on more troubles within the banking sector.  Japan is experiencing a deepening recession that has forced many households to curb spending. Record declines seen in the export market have prompted companies to lay off workers and cut wages, while slowing spending.

Industrial production for January plummeted to a new low for a third consecutive month. The report indicates that production has fallen by 10.0 percent from one month earlier. This indicates that more layoffs are on the way as companies struggle to decrease costs.

Price action as shown by the above chart showed that on Friday, USDJPY closed below previous day closed and the pivot point. That indicates today sentiment is toward the bear side. Right after the Asian session opening (23:00 GMT), the cross come crushing down and obliterated the retracement level of 50%, 61.8% and 76.4% of swing low A and swing high B. 45 mins later, the cross reached the 161.8% fibo projection of swing high to low B-C with appearance of piercing candle. There was an early morning Asian session (24:00 GMT)   reversal of falling prices since the last high at B. I initiated my 1 min scalp trade at 00:54 GMT. Refer to the 1 min chart below. The cross went straight up without any sign of correction for about one hour. I quit my long position at pivot point of 97.66 for a profit of 50 pips.