USD/JPY Forex Technical Analysis – Weekly Tone Strengthens Over 113.356, Weakens Under 112.978
The USD/JPY is trading higher for week. The rally is being fueled by a strong recovery in global equity markets which is encouraging safe-haven investors in the Japanese Yen to square their positions. A divergence in the monetary policies of the hawkish U.S. Federal Reserve and the dovish Bank of Japan is also helping to underpin the Dollar/Yen.
Weekly Technical Analysis
The main trend is up according to the weekly swing chart. A trade through 114.580 will signal a resumption of the uptrend. A move through 111.375 will change the main trend to down.
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The main range is 109.770 to 114.580. Its retracement zone at 111.347 to 110.584 is controlling the near-term direction of the USD/JPY. This zone is also support.
The short-term range is 114.580 to 111.375. Its retracement zone at 112.978 to 113.356 was tested on Wednesday and sellers stopped the rally. They are going to try to form a secondary lower top. Buyers, on the other hand, are going to try to break out of this zone.
Weekly Technical Forecast
Based on the price action this week, the direction of the USD/JPY into Friday’s close is likely to be determined by trader reaction to the short-term 50% level at 112.978.
A sustained move over 112.978 will indicate the presence of buyers. This could lead to a test of the short-term Fibonacci level at 113.356.
Taking out 113.356 will mean the buying is getting stronger. This could lead to a test of a downtrending Gann angle at 113.580. We could see sellers on the first test of this angle, but it is taken out, we could see an acceleration into the next downtrending Gann angle at 114.080. This is the last potential resistance angle before the 114.580 main top.
A sustained move under 112.978 will signal the presence of sellers. The weekly chart indicates there is room to the downside with the next major support angle coming in at 112.270.
Traders should continue to monitor the movement in the stock market. Another sharp break could weaken the USD/JPY because of renewed safe-haven buying into the Yen. However, if buyers continue to drive stocks higher then look for a potential breakout to the upside over the downtrending Gann angle at 113.580.