USD/JPY Forex Technical Analysis – Strengthens Over 108.985, Weakens Under 107.598
The Dollar/Yen is trading flat early Thursday for a second session on light volume as traders continue to try to gauge investor sentiment. In other words, uncertainty as to whether we’re in a “risk-on” or “risk-off” environment is helping to hold prices in a tight range.
Earlier in the week, stocks rallied on the back of the announcement of a partial trade deal between the United States and China on Friday, robust U.S. earnings reports and optimism over a Brexit deal. However, the rally came to a halt and the trading ranges tightened as concerns were raised over U.S.-China trade relations, optimism over Brexit faded and the chances of a Fed rate cut rose after the U.S. reported weaker-than-expected retail sales.
At 02:53 GMT, the USD/JPY is trading 108.773, up 0.013 or +0.01%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through Tuesday’s high at 108.899 will signal a resumption of the uptrend. A trade through 106.485 will change the main trend to down. This is highly unlikely, however, the Dollar/Yen is up 10 sessions from its last main bottom, which puts the Forex pair inside the window of time for a potentially bearish closing price reversal top.
The main range is 109.317 to 104.463. Its retracement zone at 107.463 to 106.890 is support. This zone is also controlling the near-term direction of the USD/JPY.
Daily Technical Forecast
Based on the early price action and the current price at 108.773, the direction of the USD/JPY the rest of the session on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at 107.598.
Bullish Scenario
A sustained move over 107.598 will indicate the presence of buyers. If this move can create enough upside momentum to sustain the rally then look for buyers to make a run at the uptrending Gann angle at 108.985.
Overtaking 108.985 will indicate the buying is getting stronger. This could trigger a rally into another uptrending Gann angle at 109.213. Crossing to the strong side of this uptrending Gann angle will put the USD/JPY in a bullish position with the main top at 109.317 the next likely upside target.
Bearish Scenario
The inability to overcome 108.985 will signal the presence of sellers, but a break under the downtrending Gann angle at 107.598 could trigger an acceleration to the downside with the next potential downside target an uptrending Gann angle at 107.735.
This article was originally posted on FX Empire
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