Morning Market Update – USD/JPY

USD/JPY is staying consolidative and is trading above the 112.04 level temporary top. Intraday bias remains neutral first. As long as the 112.04 support holds, a further rise is in favor. The sustained break of medium term channel resistance will argue that a correction from 112.04 is already completed with the pair holding the levels. The break of 112.55 will confirm this bullish case and target a test on the 112.86 level next. On the downside, considering the bearish condition in the four hour chart, break of 112.04 will suggest rejection from the channel resistance and the pair will turn bias back to the downside.

In the bigger picture, rise from the 112.04 level is seen as the second leg of the corrective pattern. It’s unclear whether this second leg has completed or not. But the medium term outlook will be mildly bullish as long as the 112.04 support holds and there is prospect of breaking at the 112.55 level ahead. Meanwhile, a break of 112.55 will bring retest of 112.86 high. But even in that case, we don’t expect a break there on first attempt.

The dollar remains under control as the market continues to rise away. The upcoming days are characterized by strong bullish candles, whilst any recovery upcoming days are beset with struggles to make any headway and turn in effect into consolidation days. The recent candle was another consolidation day where the bulls are taking control on the pair to make any sustainable impact, before once more resuming the rise overnight. The daily momentum indicators have all now taken on a corrective outlook. The pair with the stochastic both rising above the 50 and the lines having crossed higher. The pair is back into the old pivot band so it will be interesting to see the reaction. The likelihood is that the 112.04 support which has often been seen as an inflection point will now be tested. The four hourly chart shows the resistance at 112.55 is bolstered now as a key level, with initially an area of near term overhead resistance.

The USD/JPY pair fluctuates around the EMA50 since yesterday, noticing that stochastic has still showing its positive momentum now, which might force the price to show further rise more trading which manages to get enough positive momentum to push the price to continue rising on the short term basis.

In general, we will continue to suggest the bullish trend in the upcoming sessions unless breaking the 112.04 level and holding below it, noting that breaching 112.55 will push the price to head towards 112.86 that represents our next main target.

Expected trading range for today is between 112.04 support and 112.86 resistance level.

Expected trend for today: Bullish

 
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