USD/JPY Forex Technical Analysis – Convincing Breakout Over 115.615 Puts 118.601 – 118.658 on the Radar

The Dollar/Yen closed slight lower on Thursday on extremely light volume due to the U.S. Thanksgiving holiday. However, the Forex pair remained close to a five-year peak. The dollar has strengthened against the yen all month, driven by investors betting on the divergence between the hawkish U.S. Federal Reserve and the dovish Bank of Japan to continue.

On Thursday, the USD/JPY settled at 115.375, down 0.047 or -0.04%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 115.519 will signal a resumption of the uptrend. Taking out the January 19, 2017 main top at 115.615 will reaffirm the uptrend. A trade through 113.591 will change the main trend to down.

The minor range is 113.591 to 115.519. Its 50% level or pivot at 114.555 is the nearest support.

The short-term range is 112.728 to 115.519. Its retracement zone at 114.124 to 113.794 is the value area or best support.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 115.615.

Bullish Scenario

A sustained move over 115.615 will indicate the presence of buyers. This is a potential trigger point for an acceleration to the upside with the next major target coming in at 118.601 to 118.658.

Bearish Scenario

A sustained move under 115.615 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the first pivot at 114.555.

If the selling is strong enough to take out 114.555 then look for the selling to possibly lead to a test of 114.124 to 113.794. Since the main trend is up, look for new buyers on a pullback into this area.

Side Notes

Taking out 115.519 then closing below 115.375 will form a potentially bearish closing price reversal top. If confirmed, this chart pattern can trigger the start of a 2 to 3 correction.