USD/JPY Forex Technical Analysis – Going Nowhere Fast on Light Pre-Holiday Volume

The Dollar/Yen is slightly lower early Thursday in a lackluster trade. Although the Forex pair touched its highest level since December 20 on Wednesday, the range has been pretty tight this week with most of the major players on the sidelines ahead of Friday’s U.S. bank holiday and the Easter holiday week-end.

At 00:13 GMT, the USD/JPY is trading 112.008, down 0.070 or -0.06%.

Nearly all of the price action has been controlled by the movement in U.S. Treasury yields and investor appetite for risk. The main catalyst behind the price action since last Friday has been improving economic data from China. Late last week, stronger-than-expected Trade Balance data drove demand for riskier assets. On Wednesday, it was better-than-expected Chinese GDP data which set the tone in the financial markets.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 112.170 will signal a resumption of the uptrend. The daily chart indicates there is plenty of room to the upside with the December 13, 2018 main top at 113.710 the next major target. However, we’re not likely to get there over the near-term unless the buying volume improves dramatically, or major news hits the market.

The minor trend is also up. A trade through 111.848 will change the minor trend to down. This will also shift momentum to the downside.

On the downside, support is a Fibonacci level at 111.088, a main bottom at 110.843 and a 50% level at 110.825.

Daily Technical Forecast

Based on the early price action and yesterday’s close at 112.077, the direction of the USD/JPY on Thursday is likely to be determined by trader reaction to yesterday’s high at 112.170.

Bullish Scenario

Taking out 112.170 will signal the presence of buyers. This will also signal a resumption of the uptrend. If the move creates enough upside momentum then look for a rally into the uptrending Gann angle at 112.343. Crossing to the strong side of this angle will put the USD/JPY in a bullish position.

Bearish Scenario

The inability to overtake 112.170 will indicate the presence of sellers. If this creates enough downside momentum then look for sellers to make a run at yesterday’s low at 111.915 and the minor bottom at 111.848.

A trade through 111.848 will change the minor trend to down. This will shift momentum to the downside with the next Gann angle target coming in at 111.593.

Due to the low pre-holiday volume, be careful selling weakness and buying strength.