Potential signal:
- I’m a buyer of the USD/JPY pair at ¥149.10, with a stop loss at ¥147.80.
- I’d be aiming for ¥151.
The US dollar initially gapped lower to kick off the trading session on Monday, and of course the trading week. The market then turned around to fill that gap, only to show signs of weakness yet again. At this point, the US dollar was having a difficult time against most currencies, so the Japanese yen may have gotten a little bit of “knock on effect” from other currency pairs.
Technical Analysis
The technical analysis for this pair is interesting, because we are most certainly pressuring a major resistance barrier, in the form of ¥148. We also have the 200 Day EMA sitting just above that obviously would attract a certain amount of attention as well, so I think it’s a perfect area to see a lot of consolidation and noise in that region. If we continue to see a little bit of back and forth here, I actually believe that is somewhat of a bullish turn of events, because it suggests that the markets are churning in a relatively bullish area because it was the top of consolidation, and of course we’ve seen a lot of upward momentum previously. The 50 Day EMA sits just below the ¥146 level and is rising.
As long as we stay above the ¥146 level, then I think you have to be looking at the market as one that you can start buying dips, but if we were to break below that level then it’s very possible that the US dollar might drop to the ¥143 level. This of course would be a very negative turn of events, but even in that environment we would simply be testing the bottom of the overall consolidation region. In other words, I remain bullish as things stand at the moment but recognize that they could get a bit noisy.
On a move to the upside, if we can clear the recent highs during last week, then I think it opens up the possibility of a move to the ¥151 level, something that I think happened sooner or later. I remain bullish, and I recognize that the interest rate differential continues to favor the US dollar, so I do like taking advantage of value.
Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.