USD/JPY Forex Technical Analysis – Main Trend Down, but Momentum Gradually Shifting to Upside

James Hyerczyk
Published: Jul 21, 2020, 05:29 UTC

Counter-trend buyers have been trying to establish support at the 50% level at 107.038 for the last seven sessions.


The Dollar/Yen is edging higher on Tuesday, supported for a second day by improving risk sentiment. Demand for the greenback improved on Monday after the announcement of progress toward both a coronavirus vaccine and a fiscal rescue package in Europe. In the United States, the dollar was supported against the Yen by expectations of more stimulus measures to protect the economy from another surge in coronavirus infections.

At 05:01 GMT, the USD/JPY is trading 107.321, up 0.034 or +0.03%.

Global equity markets are being supported by encouraging data from trials of three potential COVID-19 vaccines. This news is helping to offset the damaging news about rising coronavirus cases, while increasing the U.S. Dollar’s appeal as an investment versus the Japanese Yen.

Meanwhile an agreement in Europe on the economic recovery fund is seen benefiting the USD/JPY because it would likely improve the global economic outlook.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through the last main top at 107.790. A move through 106.646 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum.

On the downside, the support is layered on a series of 50% levels at 107.038, 106.706 and 106.450.

On the upside, the nearest resistance is a longer-term Fibonacci level at 108.008, followed by a longer-term 50% level at 108.851.

Daily Swing Chart Technical ForecastSo we’re going to conclude that this price level is controlling the short-term direction of the USD/JPY.

Bullish Scenario

A sustained move over 107.038 will indicate the presence of buyers. The first upside target today is yesterday’s high at 107.530. Taking out this level could trigger a surge into the main top at 107.790.

A move through 107.790 will change the main trend to up. This could trigger another surge into the Fibonacci level at 108.008.

Bearish Scenario

A failure to hold 107.038 will signal the return of sellers. This could lead to a labored break with potential downside targets coming in at 106.706, 106.667, 106.646 and 106.450.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?