USD/JPY Forex Technical Analysis – Technical Reversal Bottom May Have Signaled Momentum Shift to Upside

The Dollar/Yen settled higher on Friday, rebounding from earlier weakness in reaction to rising U.S. Treasury yields and increased demand for risky assets. U.S. economic data came in mixed, leading to a two-sided intraday range. However, the buying got stronger late in the session on positive developments over U.S.-China trade relations.

A better-than-expected U.S. Non-Farm Payrolls report produced the first surge to the upside by the USD/JPY. The headline number came in above expectations. Average Hourly Earnings also increased. The Unemployment Rate rose, but that was expected.

Later in the morning, gains were capped and the USD/JPY gave back some of its earlier gains after the release of another weak ISM Manufacturing PMI report.

Late in the afternoon, the Forex pair strengthened after China announced that it had reached a consensus with the U.S. in principle after a phone call among high-level trade negotiators this week.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the previous main bottom at 108.252. A trade through 109.287 will change the main trend to up. A move through 107.891 will signal a resumption of the downtrend.

The short-term range is 106.485 to 109.287. Its 50% level at 107.886 provided support on Friday.

The major support range is 107.463 to 106.890. Should the selling pressure continue then this will be the primary downside target and value zone.

Daily Technical Forecast

Friday’s rally started following a successful test of a 50% level at 107.886. The rally was stopped by a downtrending Gann angle at 108.287.

The lower-low, higher-close chart pattern suggests the buying is greater than the selling at current price levels. This upside momentum could carry over into Monday and lead to a strong rebound rally.