USD/JPY: the pair dropped sharply after the Bank of Japan's decision _28/04/2016

Trading recommendations

Sell ​​Stop 107.80. Stop Loss 108.10. Take-Profit 107.45, 107.00, 106.70, 104.50

Buy Stop 108.50. Stop Loss 107.90. Take-Profit 109.30, 110.00, 110.50, 111.00, 111.90, 112.15, 113.45, 114.75, 115.45


Technical analysis

After the decision of the Bank of Japan left its monetary policy in the country unchanged USD / JPY pair has fallen more than 300 points. With the opening of the European session the pair continued to decline. The couple is very close to previous lows reached in April of the year near the mark of 108.00 (EMA200 on the weekly chart). The volatility in the pair of almost 400 points.

Since mid-April the pair USD / JPY managed to recover to the level of 111.95, which passes through the EMA50 (daily chart). Slightly higher at around 112.15 level is the Fibonacci 23.6% correction to the strong decrease in pair in June 2015 with the level of 125.65. Over the last 3 months the pair has dropped more than 1300 points at the level of 121.30, having reached record lows near the 108.00 mark.

As a result, today's falling price fully offset by growth in the last week.

Indicators OsMA and Stochastic on the 4-hour, daily, weekly, monthly charts are on the side of the sellers. The pair is reduced in the descending channel on the weekly chart with a lower limit near the level of 106.70. However, the further reduction of a pair of holding back the strong support level 108.00, 107.45 (EMA50 on the monthly chart). It is not excluded that the price will bounce back from the support area close to these levels.

To resume the purchases in this case, you must wait for a turn indicator OsMA and Stochastic on the hourly and 4-hour charts on long positions.

In the event of renewed growth objectives once again will be the levels 111.00 (EMA200 the 4-hourly chart) and EMA144 (weekly chart), 111.90 (EMA50 daily chart), 112.15 (23.6% Fibonacci level), 114.75 (Fibonacci level of 38.2 %), 115.45 (EMA144 on the daily chart), 116.85 (Fibonacci level 50%).

Support levels: 111.00, 109.50, 108.00

Resistance Levels: 111.95, 112.15, 113.45, 114.75, 115.45


Overview and Dynamics

After the Bank of Japan decided to maintain the current level of asset purchases and not to change interest rates, there was a sharp strengthening of the yen and falling stock market of Japan. The Bank of Japan kept interest rates on deposits at the level of 0.1% (this decision was taken by 7 votes to 2) and the volume of purchases of assets of 80 trillion yen per year (this decision was taken by 8 votes to 1).

This decision surprised market participants, since many of them had expected the central bank will take further measures to stimulate the national economy, as has been previously stated in the bank.

Immediately after the announcement of the Bank of Japan's decision pair USD / JPY has fallen to 2.4%, while the yen showed the biggest one-day rise since 24 August 2015.

The Japanese stock index Nikkei Stock Average on the basis of trading in Asia fell 3.6% to 16666.05 points. USD / JPY The pair returned to levels close to 18-month low reached earlier in April, around the level of 108.00, which will now act as a strong support level for the USD / JPY pair from further decline.

The Bank of Japan did not change the policy, despite the further deterioration of economic conditions in the country. The inflation data, released last week, showed that consumer prices, taking into account energy prices fell in March by 0.3%. Inflation expectations of households in the last month were the lowest in three years, and wage growth slowed.

The Bank of Japan also pushed its forecast for the achievement of the inflation target of 2% for half-year for the period from April 2017 to March 2018, changing its outlook for the fourth time this year. At the same time, as noted in the bank, the balance of risks for GDP growth is "biased downward."