Trade Through 115.243 Shifts USD/JPY Momentum to Up

The Dollar/Yen is trading nearly flat on Wednesday after posting a potentially bullish closing price reversal bottom the previous session. The price action suggests investors may be taking a breather after a few choppy trading sessions as they try to get a grasp on the latest developments in Eastern Europe amid a deepening crisis in Ukraine.

At 05:51 GMT, the USD/JPY is trading 115.051, down 0.023 or -0.02%. On Tuesday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $81.51, up $0.08 or +0.10%.

The price action in the USD/JPY is reflecting the movement in U.S. Treasury bonds and U.S. equity markets. Since the Japanese Yen is a safe-haven asset, it should go up when sellers hit the U.S. stock market hard and Treasury yields go down.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending higher. A trade through 114.162 will change the main trend to down. A move through 116.339 will reaffirm the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 115.864 will change the minor trend to up.

The short-term range is 112.538 to 116.345. Its retracement zone at 114.442 to 113.992 is support. This zone stopped the selling at 114.162 on February 2.

The minor range is 116.339 to 114.501. Its 50% level at 115.420 is the next upside target and potential resistance.

Daily Swing Chart Technical Forecast

On Tuesday, the USD/JPY formed a potentially bullish closing price reversal bottom. A trade through 115.243 will confirm the chart pattern. This could trigger the start of a 2 to 3 day rally. A move through 114.501 will negate the chart pattern.

The direction of the USD/JPY into the close on Wednesday is likely to be determined by trader reaction to 114.872.

Bullish Scenario

A sustained move over 114.872 will indicate the presence of buyers. Taking out 115.243 will shift momentum to the upside, which could lead to a test of the pivot at 115.420.

Sellers could come in on the first test of 115.420. Overcoming it, however, could trigger a surge into the minor top at 115.864.

Bearish Scenario

A sustained move under 114.872 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 114.501, followed by the short-term 50% level at 114.442.