Yahoo Finance USD/JPY Fundamental Daily Forecast – Headed for Test of 107.659 to 108.159
The USD/JPY strengthened on Tuesday as investors shifted their focus on rising U.S. Treasury yields. Position-squaring ahead of the release of the Federal Open Market Committee’s meeting minutes and the shedding of risky assets also helped underpin the Dollar/Yen.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum shifted to the upside after Friday’s closing price reversal bottom. This came about after the Forex pair had hit its lowest level since November 10, 2016.
A trade through 105.540 will signal a resumption of the downtrend. The main trend will change to up on a move through 109.778.
The major long-term retracement zone is 108.773 to 106.440. The USD/JPY is currently trading inside this range. Trader reaction to this range will determine the longer-term direction of the Forex pair.
The short-term range is 109.778 to 105.540. Its retracement zone at 107.659 to 108.159 is the primary upside target. Since the main trend is down, we expect to see sellers come in on the first test of this zone. Taking out 108.159 will indicate the buying is getting stronger.
Daily Technical Forecast
Based on Tuesday’s close at 107.318 and the earlier price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at 107.040.
A sustained move over 107.040 will indicate the presence of buyers. This could create the upside momentum needed to challenge the short-term 50% level at 107.659.
The 50% level is the trigger point for an acceleration into the Fibonacci level at 109.159. Overtaking this level could lead to a test of a pair of downtrending Gann angles at 108.653 and 108.852, followed by the major 50% level at 108.773.
A sustained move under 107.040 will signal the presence of sellers. The daily chart is wide open to the downside if this angle fails as support. The next downside targets are 106.440 and 106.290.
The last uptrending Gann angle before the 105.540 main bottom is 105.915.
Basically, look for a strong upside bias to develop on a move over 107.659, and for a downside bias to develop on a sustained move under 107.04. Look for volatility today at 1900 GMT with the release of the Fed minutes.
This article was originally posted on FX Empire
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