USD/JPY Forex Technical Analysis – Trader Reaction to 109.371 Sets the Tone

The Dollar/Yen finished higher on Friday after a steep drop the previous session. The U.S. Dollar was underpinned by upbeat U.S. economic data, which seemed to be theme last week. Final GDP came in at 2.1% as expected. Personal Spending met expectations, but Personal Income bested the forecast. Revised University of Michigan Consumer Sentiment also nudged higher than the forecast.

On Friday, the USD/JPY settled at 109.456, up 0.096 or +0.09%.

The Japanese Yen continued to be pressured by the Bank of Japan’s decision to hold rates steady, while issuing a warning about the economy.

Daily Swing Chart Technical Analysis

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

The upside momentum has slowed to a crawl with the Dollar/Yen posting a mostly sideways trade the past six sessions.

The key level to watch for direction is the major Fibonacci level at 109.371.

The short-term range is 108.430 to 109.707. Its 50% level at 109.069 is the first downside target and potential support. It’s also the trigger point for an acceleration to the downside with the 50% level at 108.434 the next likely downside target.

Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at 109.456, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the Fibonacci level at 109.371.

Bullish Scenario

A sustained move over 109.371 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential surge into the minor top at 109.707 and the main top at 109.728.

Bearish Scenario

A sustained move under 109.371 will signal the presence of sellers. This could trigger a break into the 50% level at 109.069.

Side Notes

Look for light volume due to the holiday shortened week. Unless there is surprise news, it may be a good idea to fade breakouts and breakdowns if day-trading.