Asian equities markets traded higher today despite news of the coronavirus spreading. The Hang Seng Index recouped its losses from yesterday. It is trading 355.7 points or 1.27% higher at 28,341.0. The Nikkei 225 is also in the green by 166.8 points or 0.70% at 24,031.4. Meanwhile, the Shanghai Composite Index is up by 13.4 points or 0.28% higher at 3,060.755.
Recent news cites that there have now been 300 people infected by the coronavirus. Additionally, the US has reported its first case of the infection. Investors, however, shrugged off these worrying news amid a promise from the Chinese government that it would step up its efforts to contain the disease. Today’s profit across Asian equities markets should not come as a surprise though. As I reported yesterday, stocks made a quick rebound in 2003 despite the SARS outbreak.
Risk currencies did not partake in any rally. The Kiwi and Aussie are the two weakest currencies against the dollar today. NZDUSD is down 0.17% while AUDUSD is in the red by 0.14%.
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On the 4-hour chart, we can see that after USDJPY hit resistance at 110.20, it has traded lower. A lower high has materialized following a series of higher highs. Consequently, a head and shoulders pattern materialized. Neckline support is around 109.80. A bearish close below this level could mean that USDJPY may find support at its previous highs around 109.60. If support at that level does not hold, the next floor could be at 109.20 where the 100 SMA and 200 SMA are.
However, be wary of a bullish close above 110.11. This high represents the second shoulder. A bullish close above it would invalidate the chart pattern. It may even signal a rally to 110.20. If there are enough buyers in the market to break resistance, the next ceiling could be at 110.66 where USDJPY topped on May 22, 2019.