USD/JPY Forex Technical Analysis – Consecutive Inside Days Usually Paired with Major News Event

The Dollar/Yen closed lower on Tuesday with the Forex pair forming an inside move for a second consecutive session. The price behavior suggests investor indecision and impending volatility. Perhaps keeping a lid on the Forex pair was a slight dip in U.S. Treasury yields. Underpinning the Dollar/Yen was likely steady demand for risky assets.

On Tuesday, the USD/JPY settled at 109.497, down 0.070 or -0.06%.

Worries over the details of the U.S.-China trade deal and renewed concerns over Brexit may have also capped gains, but these events were likely offset by the release of a series of better-than-expected U.S. economic data.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the December 2 main top at 109.728 will signal a resumption of the uptrend. The main trend will change to down on a trade through 108.430.

The first support is a long-term Fibonacci level at 109.371. The second support is a short-term 50% level at 109.069. The third important support is the long-term 50% level at 108.434.

Daily Swing Chart Technical Forecast

Given the two consecutive inside days, the next major moves are likely to be determined by trader reaction to 109.707 and 109.184. We’re expecting volatility, however, a successful breakout to the upside or downside will be dependent on rising volume.

Bullish Scenario

In order to generate enough upside momentum, the buying is going to have to be strong enough to take out the high at 109.707 and the two main tops at 109.728 and 109.930.

Bearish Scenario

The first sign of weakness will be a breakdown under the main Fibonacci level at 109.371. However, the breakdown is likely to take place on a sustained move under 109.184. The first target is the short-term 50% level at 109.069. This is a potential trigger point for an acceleration to the downside with the next major target 108.434 to 108.430.

Side Notes

The current chart pattern is usually paired with a surprise news event so be ready for the return of volatility.