USD/JPY Forex Technical Analysis – Must Sustain Move Over 112.874 to Set Up Test of 113.21 then 113.745
Rising yields and the easing of tensions over the trade dispute between the United States and China helped drive the Dollar/Yen higher last week. This week, the spotlight will once again be on these issues because late Friday, China cancelled trade negotiations with senior U.S. officials and the Fed is widely expected to raise rates on Wednesday.
The Dollar/Yen could come under pressure if the trade news creates a “risk-off” situation and if the Fed’s monetary policy statement suggests a “dovish” tone by the central bank.
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Last week, the USD/JPY settled at 112.548, up 0.476 or +0.42%.
Weekly Swing Chart Technical Analysis
The main trend is up according to the weekly swing chart. A trade through 113.210 will signal a resumption of the uptrend. The main trend will change to down on a move through 109.770.
The minor trend is also up. A trade through 110.379 will change the minor trend to down. This will also shift momentum to the downside.
The short-term range is 113.210 to 109.770. Its retracement zone is 111.896 to 111.490. This zone is new support. Holding above it will help maintain the upside bias.
The major support zone is 110.859 to 109.664.
Weekly Swing Chart Technical Forecast
Based on last week’s price action, the major support is the Fibonacci level at 111.896. Taking out last week’s high at 112.874 will signal a resumption of the uptrend.
Taking out last week’s low at 111.665 will make 112.874 a new minor top. This could lead to moves into a 50% level at 111.490, followed by 119.859.
The price action is being driven by momentum so taking out 112.874 will signal that the momentum is getting stronger. If accompanied by better-than-average volume then look for a possible test of the main top at 113.210, followed by 113.745.
Taking out 112.874 then breaking back under last week’s close at 112.548 will indicate the selling is greater than the buying at current price levels. It will also put the USD/JPY in a position to form a potentially bearish closing price reversal top.