USD/JPY Forex Technical Analysis – Could Break Sharply if Sellers Take Out 109.361

How does the outlook turn bullish? Reverse the bearish signals. Hold above 109.361, cross to the strong side of the Gann angle, and take out 109.688, 109.706, 109.728 and especially 109.930.
James Hyerczyk
USD/JPY

The Dollar/Yen finished lower on Friday after hitting its highest level since December 13. The price action indicates that buyers are still hesitating just slightly below the May 30 top at 109.930.

The greenback fell from a four-week high against the safe-haven Japanese Yen on Friday as investors worried over possible renewed geopolitical tensions between the United States and Iran. The renewed concerns stemmed from reports that the United States imposed more sanctions on Iran and are threatening additional sanctions.

On Friday, the USD/JPY settled at 109.507, down 0.016 or -0.01%.

The U.S. Dollar was also on the defensive after the release of a disappointing U.S. Non-Farm Payrolls report. The headline number came in soft, and Average Hourly Earnings were up only 0.1% versus a 0.3% estimate.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on January 8 and its subsequent confirmation.

The main trend will change to up on a move through 109.706, followed by additional main tops at 109.728 and 109.930. I’m convinced that buyers will actually have to take out 109.930 to really trigger a breakout to the upside. A move through 107.651 will signal a resumption of the downtrend.

The main range is last year’s trading range of 112.405 to 104.463. Its retracement zone at 108.421 to 109.361 is controlling the longer-term direction of the USD/JPY. Trading on the strong side of this zone is helping to give the Dollar/Yen a slight upside bias.

Daily Gann Angle Technical Analysis

Based on Friday’s price action, the key Gann angle to watch is the angle from the 112.405 main top, moving down at a rate of 0.015625 per day since April 24, 2019.

On Friday, the USD/JPY closed at 109.508, just slightly below the angle at 109.514. This may be an indication that the selling is greater than the buying at current price levels.

Daily USD/JPY

Short-Term Outlook

The USD/JPY formed a potentially bearish closing price reversal top at 109.688 on Friday. Taking out 109.438 will confirm the chart pattern. This could trigger the start of a 2 to 3 day break.

Closing on the weak side of the downtrending Gann angle at 109.514 is another sign of selling pressure.

Finally, crossing to the weak side of the Fibonacci level at 109.361 will be another indication of selling pressure.

How does the outlook turn bullish? Reverse the bearish signals. Hold above 109.361, cross to the strong side of the Gann angle, and take out 109.688, 109.706, 109.728 and especially 109.930.

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