Japanese Yen Technical Outlook: Downtrend Back in Play?

0
7

Title:

Japanese Yen Technical Outlook: Downtrend Back in Play?

Teaser:

USD/JPY’s break above last week’s high may have reduced near-term downside risks, but it does not necessarily imply a resumption of the multi-month uptrend. What is the perspective and the signposts to look for?

Body:

US Dollar, Japanese Yen, USD/JPY – Technical Outlook:

  • USD/JPY recovered from key support.
  • A resumption of the multi-month uptrend looks less likely
  • What is the outlook and what are the signposts to look for?

Recommended by Manish Jaradi

How to Trade USD/JPY

USD/JPY INTERMEDIATE TECHNICAL VIEW – NEUTRAL

USD/JPY’s break above last week’s high may have reduced near-term downside risks, but it does not necessarily imply a resumption of the multi-month uptrend. Conversely, USD/JPY could be set for a range-bound phase in the coming weeks.

USD/JPY confirmed a scenario I outlined on November 13th, breaking out of the lows of November 15th at 137.70 on Monday to break above a ceiling on last week’s horizontal trend at around 140.80. This follows a bounce from July’s horizontal trend, around 139.50, as well as the 89-day moving average. The pair is now testing a hurdle at the November 11 high of 142.50, which is bolstered by the 89-period moving average on the 4-hour and daily charts. This is not too far from 143.00-143.15 (the 50% retracement of the November 7-11 decline).

USD/JPY 240 minute chart

image1.png

Chart Created With TradingView

If last week’s rebound is to be extended, it is critical that USD/JPY breaks above 143.00-143.15 at least. Often when a large/wide body candle appears on a chart, the 50% retracement of that candle tends to serve as key resistance from a trend perspective. Large moves reflect greater conviction among market participants and if the market is unable to recover half of the move, it may imply further weakness.

{{GUIDE|JPY}}

USD/JPY Daily Chart

image2.png

Chart Created With TradingView

In addition, for a retest of the October high, USD/JPY needs to rise above 147.50 (the high of the week of November 7-11). Given overbought conditions and fatigue on higher time charts, the odds of USD/JPY breaking above 147.50 appear to be low. Indeed, it is quite possible that USD/JPY could settle for 137-147 in the coming weeks.

On the other hand, if USD/JPY fails to clear 143.00-143.15, then the chance of a retest of 137.70 would not only increase, but also raise the odds of a drop to the 200-day moving average (now around 133.50).

Recommended by Manish Jaradi

The Fundamentals of Range Trading

— Written by Manish Jaradi, Strategist for DailyFX.com



Source

LEAVE A REPLY

Please enter your comment!
Please enter your name here