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James Hyerczyk

The Dollar/Yen posted a choppy, two-sided trade on Wednesday after failing to confirm the previous session’s closing price reversal bottom. Early session weakness was fueled by safe-haven buying of the Japanese Yen in response to a surprise 50-basis point rate cut by the Reserve Bank of New Zealand that triggered a plunge in global bond yields. The Forex pair rebounded later in the session after a strong recovery in U.S. equity markets, following a rise above the psychological 7 per dollar level by the Chinese Yuan.

On Wednesday, the USD/JPY settled at 106.275, down 0.190 or -0.18%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 105.496 will signal a resumption of the downtrend.

The main trend will change to up on a trade through 109.317. This is highly unlikely, but the Forex pair is still susceptible to a potentially bullish closing price reversal bottom. This chart pattern won’t change the main trend to up, but it could trigger a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through 107.086 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 109.317 to 105.496. If the minor trend changes to up then look for the rally to extend into its retracement zone at 107.407 to 107.857.


Daily Technical Forecast

Thursday’s direction will be determined by momentum. Taking out 106.483 will signal the presence of buyers. This will also make 105.496 a new minor bottom. This could trigger a rally into a downtrending Gann angle at 106.817.

Since the main trend is down, look for sellers on the first test of 106.817. Overtaking this angle, however, could trigger an acceleration to the upside with the next targets a minor top at 107.086 and the short-term retracement zone at 107.407 to 107.857.

On the downside, taking out 105.496 will signal a resumption of the downtrend. This could trigger a further break into the January 1, 2019 main bottom at 105.180. If this level fails then look for a potential acceleration into the March 26, 2018 main bottom at 104.600.

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