USD/JPY Forex Technical Analysis – February 20, 2019 Forecast

Based on the early price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 110.693.
James Hyerczyk
USD/JPY

The Dollar/Yen is trading lower on Wednesday after Bank of Japan (BOJ) Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if the stronger Yen derails the path toward its 2 percent inflation target. The U.S. Dollar is being lifted by this news on light volume ahead of the release of the January U.S. Federal Reserve Monetary Policy Minutes at 1900 GMT.

At 03:04 GMT, the USD/JPY is trading 110.851, up 0.245 or +0.22%.

Daily USD/JPY

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, upside momentum has slowed since the formation of a potentially bearish closing price reversal top on February 14 at 111.130.

A trade through 111.130 will negate the closing price reversal top and signal a resumption of the uptrend. The closing price reversal top does not signal a change in trend, but rather the selling is greater than the buying at current price levels. The actual trend changes to down on a move through 108.495.

The minor trend is also up. A trade though 110.255 will change the minor trend to down. This move will shift momentum to the downside.

The main range is 113.710 to 105.180. Its retracement zone is 109.445 to 110.452. This zone is controlling the near-term direction of the USD/JPY. The market is currently trading on the strong side of this zone, giving it an upside bias.

The minor range is 111.130 to 110.255. Its 50% level or pivot at 110.693 is providing support early Wednesday.

Daily Technical Forecast

Based on the early price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 110.693.

Bullish Scenario

A sustained move over 110.693 will indicate the presence of buyers. If this generates enough upside momentum then look for buyers to drive the Forex pair into 111.130. Taking out this level will signal a resumption of the uptrend. This could trigger an acceleration to the upside. The daily chart indicates there is plenty of room to the upside with 113.710 the next major main top target.

Bearish Scenario

A sustained move under 110.693 will signal the presence of sellers. The first target is the major Fibonacci level at 110.452. Crossing to the weak side of this level will indicate the selling pressure is getting stronger. This could lead to a test of the minor bottom at 110.255.

A trade through 110.255 will change the minor trend to down. If this move generates enough downside momentum then look for the selling to possibly extend into the major 50% level at 109.445 over the near-term.

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