On the Daily chart above, in line with higher time frame charts, our bias is currently bearish. Since the end of a bullish retracement early last week, price has realigned itself with the major bearish trend. However, the USDJPY pair – as well as the other majors – started this week with a “gap”: we had about a 50-pip gap between Friday’s close @ 90.07 and Monday’s open @ 89.56. It’s generally accepted that price usually moves to close a “gap” between the close and the open of a previous candle and a new candle, respectively; and as at the time of this analysis, price had done exactly that: it retraced upward from today’s open @ 89.56 to Friday’s close @ 90.07. Coincidentally, the 90.07 level aligns with the most recent Daily swing low @ 90.06 (which we've highlighted using the upper blue broken line). This might be a good resistance level to turn price southward – in line with our bias. In case price resumes its downward move, as we’re anticipating, we should expect a strong support around a Daily swing low @ 88.82 (which we've highlighted using the lower blue broken line).
On the H4 chart above, price has broken the most recent swing low @ 90.83 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. The white horizontal line @ 91.60 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.
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