USD/JPY Forex Technical Analysis – Bearish Traders Defending 109.318 Creating Key Resistance

The Dollar/Yen is trading nearly flat for a third straight session with investors showing little reaction to the sharp rise in demand for risky assets, which tends to drive the U.S. Dollar higher, and the announcement of new fiscal stimulus from the Japanese government, which tends to drive the Japanese Yen lower. The price action indicates these two events may be off-setting, leading to a mostly sideways trade.

At 07:46 GMT, the USD/JPY is trading 108.921, up 0.065 or +0.06%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 111.715 will change the main trend to up. A move through the last main bottom at 106.921 will signal a resumption of the downtrend.

The short-term range is 111.715 to 106.921. Its retracement zone at 109.318 to 109.884 is acting like resistance.

The main range is 112.226 to 101.185. Its retracement zone is 108.008 to 106.706.

The intermediate range is 101.185 to 111.715. Its retracement zone is 106.450 to 105.207.

Combining the main and intermediate ranges creates a major support cluster at 106.706 to 106.450.

Daily Technical Forecast

Based on the price action this week and the current price at 108.921, the direction of the USD/JPY the rest of the session on Monday is likely to be determined by trader reaction to the short-term 50% level at 109.318.

Bearish Scenario

A sustained move under 109.318 will indicate the presence of sellers. The first downside target is an uptrending Gann angle at 108.421. If this fails then look for the selling to extend into the main Fibonacci level at 108.008.

The Fib level is the trigger point for an acceleration to the downside. This could drive the USD/JPY into a support cluster at 106.921.

Bullish Scenario

Overtaking 109.318 will signal the presence of buyers. This could trigger a surge into a resistance cluster at 109.318, 109.884 and 110.039. The latter is a potential trigger point for an acceleration to the upside with the next target angle coming in at 111.132. This is the last potential resistance angle before the 111.715, 112.226 and 112.405 main tops.