USD/JPY Forex Technical Analysis – Likely to Straddle 109.371 Fibonacci Level on Light Volume

The Dollar/Yen closed lower on Monday in thin pre-Christmas trading as many of the major players sat on the sidelines. The price action on Tuesday could be even worse with the U.S. stock and Treasury markets scheduled to close early ahead of Wednesday’s U.S. bank holiday.

Helping to underpin the Forex pair may have been demand for risk with the major U.S. stock indexes hitting record highs. Perhaps putting a lid on the Dollar/Yen was weaker-than-expected U.S. economic data.

On the data front, new home sales in November totaled 719,000, 13,000 less than expected, the U.S. Census Bureau said Monday. Durable goods orders rose 0.1% last month, in line with estimates but down 1.1% from the same month a year ago.

On Monday, the USD/JPY settled at 109.380, down 0.076 or -0.07%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, six days of sideways price action has taken some of the wind out of the momentum sail.

A trade through 109.728 will reaffirm the uptrend. The main trend is safe today. It will change to down on a move through 108.430.

The USD/JPY is attempting to establish support on the strong side of a longer-term Fibonacci level at 109.371. The longer-term 50% level support is at 108.434.

The short-term range is 108.430 to 109.707. Its 50% level at 109.069 is additional support. Since the main trend is up, buyers could come in on the first test of this level.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at 109.380, the direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the main Fibonacci level at 109.371.

Bullish Scenario

A sustained move over 109.371 will indicate the presence of buyers. It’s going to be difficult, but if this move creates enough upside momentum, traders may take a run at 109.707, followed closely by 109.728 and 109.930.

Bearish Scenario

A sustained move under 109.371 will signal the presence of sellers. If this move generates enough downside momentum then look for the move to possibly extend into the short-term 50% level at 109.069. Not only is this level support, but it’s also a potential trigger point for an acceleration to the downside.