The Dollar/Yen is trading lower on Wednesday as investors begin positioning themselves ahead of Friday’s speech by Federal Reserve Chair Jerome Powell at the central bankers’ symposium at Jackson Hole, Wyoming. Safe-haven buying is also driving investors into the Japanese Yen as they respond to falling Treasury yields and lower demand for risky assets.
At 06:19 GMT, the USD/JPY is trading 106.309, down 0.301 or -0.28%.
On Wednesday, the Forex pair closed higher after the release of the Fed minutes, however, it traded inside the previous session’s range, which indicates investor indecision and impending volatility.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, the sideways to slightly higher price action since August 12 suggests traders are trying to shift momentum to the upside.
The main trend will change to up on a trade through 109.317. This is highly unlikely, but there is room to complete a normal 50% to 61.8% retracement. A trade through 105.049 will signal a resumption of the downtrend.
The minor trend is also down. A trade through 107.086 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is 105.049 to 106.976. Its 50% level or pivot at 106.013 has been providing support since August 13.
The short-term range is 109.317 to 105.049. Its retracement zone at 107.183 to 107.687 is the primary upside target.
Daily Technical Forecast
Without momentum to guide the trade, the USD/JPY can move in either direction on Thursday.
If momentum shifts to the downside then look for a break into a support cluster formed by an uptrending Gann angle at 106.049 and a short-term pivot at 106.013. We could see a counter-trend bounce on a test of this area. If 106.013 fails as support then look for the selling to possibly extend into the next potential support cluster at 105.567 to 105.549. This is the last potential support area before the 105.049 main bottom.
If momentum shifts to the upside and this creates enough upside momentum then look for buyers to make a run into a series of targets. The first target is the high at 106.976. The second target is the uptrending Gann angle at 107.049. This is followed by the minor top at 107.086 and the 50% level at 107.183.
Needless to say, it’s going to take some big buying volume to take out the resistance.
This article was originally posted on FX Empire
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