Today on USDJPY – Daily and H4 charts support Short trades.

On the Daily chart above, we could see that the USDJPY pair has been in downward channel formation since the second week of this month, and currently, traders still seem comfortable with the formation. After several days of hugging the upper edge of the channel, price is probably ready to now test its lower edge. There seems to be enough room for price to continue its southward journey before encountering a potential major support – the Weekly chart most recent swing low @ 91.70 (which we’ve highlighted using the blue broken line). The strength of the 91.70 level is buttressed by the channel formation as we would observe that the lower edge of the channel – a potential reversal area in itself – might coincide with the 91.70 support to form a support confluence if price eventually travelled down that far. In all, the current price behavior is good enough to sustain our bias for a downward price move – from a day trade perspective.

On the H4 chart above, yesterday, price broke the most recent swing low @ 93.20 (which we’ve highlighted using the blue broken line) downward. That sustains our bias in favor of a downward price move. The white horizontal line @ 94.06 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.