USD/JPY Forex Technical Analysis – Key Downtrending Gann Angle at 106.728

The Dollar/Yen closed higher last week, boosted by increased demand for higher risk assets, rising U.S. interest rates and a hawkish U.S. Federal Reserve.

The USD/JPY settled the week at 106.847, up 0.560 or +0.53%.

This week’s price action is expected to be impacted by several U.S. economic reports including Core Durable Goods Orders, Preliminary GDP and ISM Manufacturing PMI. The biggest impact on prices should come from the testimony of Fed Chair Jerome Powell before Congressional committees on Tuesday and Thursday.

The Forex pair will also be influenced by demand for higher-risk assets. Rising stocks should be supportive for the USD/JPY. A sell-off in the stock market should underpin the Japanese Yen.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. The Forex pair is in no danger of changing the main trend to up, but it is in a position to form a potentially bullish closing price reversal bottom. Taking out 105.540 and closing higher for the week will form this chart pattern.

The main range is 98.887 to 118.658. Its retracement zone at 108.773 to 106.440 is currently being tested. Trader reaction to this zone will determine the longer-term tone of the market.

Weekly Technical Forecast

Based on last week’s close at 106.847, the direction of the USD/JPY this week is likely to be determined by trader reaction to the Fibonacci level at 106.440.

A sustained move over 106.440 will signal the presence of buyers. Overtaking the steep downtrending Gann angle at 106.728 will put the Forex pair in a bullish position. If this move creates enough upside momentum, we could see a rally into the 50% level at 108.773.

A sustained move under 106.440 will indicate the presence of sellers. This could challenge 105.540.

Crossing to the weak side of 105.540 should trigger a break into a long-term uptrending Gann angle at 104.387. We could see a technical bounce on the first test of this angle.

Look for another acceleration to the downside if 104.387 fails as support. This could trigger a further move into the next long-term uptrending Gann angle at 101.637. This is the last potential support angle before the 98.887 main bottom.